DCAA COMPLIANCE TOOLS
I conduct a vast array of projects for government contractors each year. In conducting these projects, I have developed a number of products or tools in this process to best meet government contract requirements imposed by FAR 31.2 and FAR Subpart 15 under client imposed circumstances. They are also used to help clients meet DCAA requirements or preferences and pass DCAA audits. I provide these products to my clients during the course of consulting projects normally free of charge.
These tools are now available to non-client contractors that apply a do-it-yourself approach to DCAA compliance. I do not recommend contractors take this approach, but for those that do; I am making these tools available for use. It is always best to engage a government contracts professional to make certain the systems, policies and practices are implemented in a compliant manner. The tools are described below and made available at a nominal cost. Please contact me at firstname.lastname@example.org regarding any of these tools.
Indirect Cost Rate Model Template ($50)
I have developed a number of indirect cost rate models to comply with FAR 31.2 and pass DCAA audits. I use both a short version for internal rate monitoring and a long version for presentation in proposals and DCAA audits. Both are fully compliant with FAR 31.2 and DCAA audit preferences. I always recommend contractors implement systems and applications that automate this requirement as well as others. This is discussed throughout my web site. However, there are contractors who prefer the do-it-yourself approach. These tools are made available mainly for those contractors that have not implemented an automated solution for government contract cost reporting and must calculate these rates manually. Both tools include instructions.
As an alternative, for the do-it-yourself types, my suggestion is to download the ICE model from the DCAA website, http://www.dcaa.mil/ and follow the model instructions to calculate indirect cost rates. This is not a good option if you are not experienced with this model; I view it as a last resort for those seeking a no cost solution.
Government Contract Accounting Manual – Policies ($500)
Government contractors are subject to a number of regulations that require certain policies be in effect. This is especially the case for government contract compliant accounting systems. In my opinion contractors cannot pass the DCAA accounting system audit without certain policies in place. They are critical to passing the accounting system audit conducted under cost reimbursable contracts.
Over the course of my 28 years of experience I have developed literally hundreds of policies for government contractors, both large and small. A few years ago I developed a manual tailored to small businesses to pass the DCAA accounting system audit. This manual is very FAR compliant in regards to accounting system requirements. It has passed all DCAA audits that I have been associated with. The manual is requirements based not written for any contractor in particular. I recommend that users of this manual edit it some tailoring it to their unique operational circumstances. Clients use this manual as a guide as well in developing their own set of accounting system policies.
RFP proposal instruction vary substantially. Any model used must be customized to meet the specific RFP cost proposal instructions, format and unique circumstances. These templates can be easily modified as needed.
Unallowable Costs Explained Handbook ($25)
I hear a great deal of complaints from small business regarding the accounting and cost regulation, FAR 31.2, Cost Principles For Commercial Organizations. Their complaints are based on the fact this regulation is difficult for most to understand and manage. I could not agree more. In response to these inquiries I developed a handbook that explains FAR 31.2 in normal layman’s terms to the extent possible. I highlight those costs that are expressly unallowable in one place. It is a go-to for small government contractors. I offer this handbook to my clients and am now making it available to non-clients as well.
Chart of Accounts ($200)
The first challenge for government contractors in developing an adequate accounting system is to implement a cost structure that is compliant with FAR 31.2 requirements and DCAA preferences. The requirements include:
- Segregation of direct costs from indirect costs by accountAccumulation of costs by cost element by project and in certain cases by Contract Line Item.
- Pool indirect costs in homogenous indirect cost poolsPool development and accumulation of costs must be consistent with how costs are proposed on cost proposals and invoiced or claimed under government contracts if applicable.
- Segregate unallowable costs into unallowable cost pool(s).
- DCAA also prefers account numbers and account descriptions. This is not a FAR requirement but a DCAA preference.
I normally develop this cost structure for my clients. However, for those that prefer the do-it-yourself approach I make available a compliant chart of accounts for their use. This chart of accounts is requirements based. It was not developed for any contractor in particular and assumes the standard cost accounts and the standard three indirect cost pool structure. Obviously this chart of accounts would need to be tailored to the specific needs of the contractor.
If the contractor prefers to take advantage of my assistance, consulting support is available. Consulting support to help with implementing any of these tools or any other task is invoiced on an hourly basis at the small business rate of $150 an hour.