One of the biggest hurdles for contractors pursuing cost-reimbursement work is ensuring they have a DCAA-compliant accounting system. But what does “compliant” really mean?
Elements of a DCAA-Ready System
A DCAA-ready system must:
- Segregate costs: Segregate direct, indirect, and unallowable costs.
- Allocate indirect rates: Apply rates consistently and logically.
- Track labor: Monitor by employee, job, and labor category.
- Support timekeeping: Establish policies that will withstand an audit.
- Provide visibility: Ensure access to incurred costs at any point in time.
- Produce accurate rates: Generate provisional billing rates and indirect rate proposals.
Even established contractors struggle with these requirements—and many do not discover weaknesses until an audit reveals them.
At Woodard Walker, we help contractors assess whether their system meets DCAA expectations and connect them with accounting and legal partners who can implement improvements. A strong accounting system not only supports compliance but also increases competitiveness and improves long-term profitability.
Upcoming: In Blog 4, we break down how Cost Volumes work, and how to prepare a competitive Cost Volume Proposal.
