DCAA Business Systems

You have a competitive advantage when your company’s accounting system that been determined to be adequate for cost-reimbursement contracting. Establishing an accounting system and having that system found to be adequate for cost-reimbursement contracting is a barrier to market entry. Government contractors that can overcome the challenge(s) are in the club and able to compete for awards; whereas those that cannot are left outside, looking in.

We have seen the proud badge of honor writing on company’s website, in proposals and email signature, “we are DCAA compliant.”

Government contractors that want to compete for cost-reimbursement contracts need to have an accounting system that has been found to be adequate for such contracts—it is crucial and it must be done. The challenge for many government contractors is that DCAA will not perform a review of a contractor’s accounting system just because the contractor wants the audit to be performed. DCAA only goes in at a contracting officer request, and a contracting officer only requests a review when the contractor is already a bidder in a competition. Therefore, the contractor has to start the bid process, spending highly valued B&P dollars, without knowing whether it has an adequate accounting system. If it gets a pass from DCAA, then great! However, if not, then all its efforts have been wasted. That is a lot of uncertainty to take into a competition that is already an uncertain proposition.

The contractor can (and should) engage that CPA firm whenever it believes it is ready to have its accounting system found to be adequate. Although technically, only a government contracting officer can determine whether an accounting system is compliant, contracting officers overseeing a source evaluation and selection process are willing to overlook that nuance and accept whatever the independent CPA is willing to say. Sadly, too often, government contractors see this as a “check-the-box” thing; instead of a process that is supposed to help them better manage their own businesses and the contracts.