4 Hurdles to Clear When Entering the Federal Market

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government contractor hurdles

Government contractors who do business with the Department of Defense or other federal agencies face unique challenges not present in the commercial sector. The government, often the Defense Contract Audit Agency (DCAA), wants to ensure you follow sound cost accounting practices for measuring, assigning, and allocating project costs to cost objectives under federal contracts. Having a solid government- and DCAA-compliant accounting software system is essential. Here are 4 hurdles you will face and proven ways to clear them.

1 – Qualifying for the race and breaking into the market  – Unless you do your homework and pass the federal Pre-Award Accounting System Survey, you may not even get into the market and win your first contract. Or, if you get a small contract without having your system evaluated, they may require that you pass this survey mid-contract or for the next contract. Moreover, larger contracts have a further hurdle: Submitting a Cost Accounting Standard (CAS) Disclosure Statement. All of these are easily circumvented through choosing a technology partner that knows software and compliance to help you prepare.

2 – Procuring a system that eliminates the risk of financial injury - If you don’t have a good accounting / ERP system to estimate costs—particularly a consistent method of allocating indirect costs—you can lose money on a contract. Keep in mind the opposite is true. If you do have a good system and your staff is well trained in compliance, the federal market can be lucrative. Dynamics SL is Microsoft's flagship solution for government contractors with a proven system to segregate direct and indirect costs and track projects.

3 – Gaining confidence to pass audits, avoid fines, and stay in the race – You need to anticipate annual or surprise “floor check” audits. Some common audits are the pre-award, the accounting system review, incurred cost audits, and a timesheet check. Having a technology partner with compliance expertise that rightly configures your accounting system and can help with training will help you gain confidence to pass audits with flying colors, stay the course, and prevent costly fines.

4 – Setting up internal controls to ensure you’re not disqualified – If you fail an audit, you might lose credibility with government customers and lose current or future opportunities. The good news is you can get help from a partner to set up safeguards so your financial policies, procedures, and accounting system are deemed “low risk” by the government.

With smart planning, you can easily clear these four hurdles and successfully compete in the federal market. See Compliance Made Easier and how Dynamics SL and an expert partner can help.

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