DCAA compliance is important to ensure that you are in good standing with government agencies. Otherwise, the procurement process for government-issued contracts can become more of a challenge. The following is a review of DCAA compliance and the importance of ensuring that you have the proper accounting systems in place before submitting a government contract proposal.
What Is DCAA Compliance?
The Defense Contract Audit Agency (DCAA) is a government agency that performs audits on Department of Defense (DOD) contracts. Other government agencies may use the DCAA for audit purposes as well or to provide accounting and financial advisory services. DCAA compliance means the contractor follows the regulations that are established in FAR, CAS, and other government contracting standards and requirements.
The purpose of the DCAA is to ensure that government agencies are receiving a fair and honest price for the goods and services provided, verify that the contractor is capable of performing the necessary job duties, and check the contractor’s accounting systems. This is done through pre-award surveys and audits.
Although DCAA compliance is not required prior to submitting a government contract proposal, you place your standing with government agencies in jeopardy if you procure contracts and then later fail a DCAA audit. Subsequently, it is strongly advised that you ensure that your business follows the necessary compliance measures established in FAR, CAS, and other government rulebooks that outline the standards and regulations that government contractors must follow.
What Are FAR And CAS?
The Federal Acquisition Regulation (FAR) and the Cost Accounting Standards (CAS) are specific rules that government contractors must follow to maintain DCAA compliance. FAR is the more extensive guidebook and provides primary sets of rules that the DCAA uses to determine compliance.
CAS looks more specifically at the government contractor’s cost accounting practices. Among other important standards, CAS tells government contractors how to properly maintain accounting systems to ensure optimal DCAA compliance.
What Is A Pre-Award Survey?
When you apply for a government contract with the DOD or another government agency, the DCAA may perform what is known as a pre-award survey. This is used to ensure that the contractor selected to provide the goods or services needed can appropriately complete the job.
During the pre-award survey, the DCAA ensures that you have the financial means to complete the contract and checks your accounting systems to ensure that costs are appropriately recorded. A pre-award survey is not as in-depth as a DCAA audit, and the DCAA simply provides a “pass” or “no pass” status.
Can You Submit A Government Contract Proposal Without DCAA Compliance?
You can submit a government contract proposal without DCAA compliance, but there are risks in doing so. Most notably, you risk being turned down for future contracts due to a damaged reputation with government agencies.
What Are The Risks Of Not Being DCAA Compliant?
Not every government contract involves a DCAA contract audit. However, if your business is audited by the DCAA and fails, then it could harm your contracting business’s reputation and standing with government agencies, making it less likely that you procure future contracts even if you are otherwise the best contractor for the job.
How Can I Know If I Am DCAA Compliant?
FAR is a lengthy rulebook of more than 1,000 pages. Maintaining DCAA compliance can be challenging for many contractors as they simply do not understand the accounting principles and other regulations that must be followed. The best way to ensure that you are compliant with DCAA regulations for government contracts is to work with a licensed certified public accountant.
What Is The Government Procurement Process?
It is helpful to understand the government procurement process before beginning to submit a government contract proposal. The government procurement process should include ensuring that you are DCAA compliant, registering your business, finding the right contracting opportunities with the government, and submitting RFPs.
Ensure That You Are DCAA Compliant
As discussed throughout this review, it is crucial to ensure that your contracting business is compliant with all DCAA regulations and standards as established by FAR, CAS, and other rulebooks that the DCAA follows. A certified public accountant (CPA) can perform an audit on your accounting systems and business processes to recognize and help correct problems.
Register Your Business
Once you have the right business and accounting systems in place, then you can register your business with the System for Award Management (SAM). To do so, you will need a DUNS number, physical business address, and an NAICS code. You may also need to create an account with various databases that provide government contracting opportunities.
Submit Requests For Proposals (RFPs)
Lastly, you can begin to submit requests for proposals (RFPs) in response to government agencies in need of specific goods and services. You can then wait and be ready to respond to any negotiations or clarification requests with your proposals.
Contact Diener & Associates Today
Diener & Associates works with government contractors to ensure DCAA compliance. If you are unsure if you are DCAA compliant or have had issues with DCAA contract audits in the past, contact our experienced and professional certified public accounting team today.