Redstone Government Consulting Blog | Compliant Accounting Infrastructure

On April 7, 2025, Defense Contract Audit Agency (DCAA) Director Ms. Jennifer Desautel announced a major DCAA reorganization to her staff that is perhaps DCAA’s largest since its 1965 inception. With the current federal government’s stress on efficiency and cost reduction, DCAA faced increased pressure to contain its costs and become more efficient. As a result, Ms. Desautel immediately began reorganizing the field and headquarters offices. DCAA will now have three Directorates (shown below): Land, Sea, and Air.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations

Job costing involves tracking all expenses related to a specific job or project, including materials, labor, subcontractors, travel, and various other costs. For government contractors, this is especially crucial. In the context of payroll, job costing means taking each labor dollar and accurately allocating it to the appropriate cost pool and project. So, theoretically, all you need to do is set up a few projects, establish a DCAA-compliant chart of accounts, ensure you're following FAR Part 31 cost principles, and you’re ready to go, right? Unfortunately, it’s not that simple.

Why Payroll Job Costing Gets Complicated in QuickBooks Online (QBO)

Job costing for government contracts is inherently complex—there’s a lot of money to allocate across multiple projects, involving numerous employees. Unfortunately, QuickBooks Online (QBO) doesn’t handle this complexity very well when it comes to payroll. The system struggles with efficiently tracking labor dollars across multiple projects and accounts simultaneously. Here’s an example to illustrate:

Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Small Business Compliance, Quickbooks, Federal Acquisition Regulation (FAR)

The now infamous NIH Guidance (NOT-OD-25-068) and Executive Order 14222 started us thinking. Is the Department of Defense (DoD) possibly the next domino to fall? After all, the DoD has a very large contract spend of $431.4 billion based on the Defense Spending by State, FY 2023 — Executive Summary. We looked to see if we could find data on how much of that spend is going to indirect costs (i.e., overhead). Surprisingly, the only data we could find is very dated. The data comes from the DoD Indirect-Cost Management Guide from October 2001 posted on the Defense Acquisition University (DAU) website. The guide states, “estimates made by the Defense Contract Management Command (DCMA), in conjunction with discussions with defense contractor top management on their DCMA Overhead Initiative, indicate[s] that indirect costs constitute approximately $90 billion of the $170 billion total DoD work in process at all defense contractor[s].” While not clear, our assumption is that this represents the 2000 or 2001 timeframe. Based on this, DoD is spending 53% of its appropriated funding on indirect costs. This means the average defense contractor has an approximate 100% indirect cost rate, covering overhead and general & administrative (G&A) costs. Based on recent experiences with our clients, we believe this is still a reasonable estimate of indirect cost on DoD contracts, if not a little higher.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

Costpoint Business Intelligence (BI) is a powerful reporting tool for extracting, analyzing, and formatting your data. Built on IBM’s Cognos Analytics with Watson platform, Cognos BI can be used to develop reports and dashboards, prepare visual data presentations, and explore the underlying data in your Costpoint system.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, DCAA Audit Support, Deltek Costpoint

Did you know that Unanet can be configured to help manage your Service Contract Act (SCA) contracts? With the correct setup, Unanet offers features that support compliance with SCA requirements—helping ensure accurate wage calculations and benefit allocations.

Here’s a quick overview of implementing SCA functionality in Unanet to make sure you’re getting it right from the start.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, DCAA Audit Support, Human Resources, Unanet, Government Regulations, Service Contract Act

If you only have FAR-based contracts, you only have one set of regulations to follow – Federal Acquisition Regulations. But what happens if you have both FAR-based contracts and grants? Grants are covered under a whole different set of requirements in 2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Let’s walk through some of the differences.

Topics: Compliant Accounting Infrastructure, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

FAR 1.604 allows a contracting officer (CO) to designate a representative to assist the CO in the technical monitoring and administration of a contract. The CO authorizes the contracting officer’s representative (COR) to perform many important tasks to assist the CO in administrating the contract during performance. However, FAR 1.602-2(d)(5) specifically prohibits the CO from authorizing the COR “to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract nor in any way direct the contractor or its subcontractors to operate in conflict with the contract terms and conditions.”

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR), REAs, Claims & Terminations

Does the Government find most of the cost incurred by a contractor to be reasonable? I must say it does appear that way. Defense Contract Audit Agency (DCAA) FY 2023 Report to Congress shows that of the $186B incurred cost audited, there was only $1.1B in audit exceptions (.6%). So, the world is good, and we can move on. If that were only the case. Remember that while this percentage is low, this is money you have already spent that the Government will not pay you for, which directly impacts your bottom line.

Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Small Business Compliance, DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

Costpoint’s automated overtime calculation streamlines your payroll process, ensuring compliance and reducing administrative burden. By leveraging Deltek’s Time & Expense module, you can configure custom overtime rules that automatically align with your company’s policies and state or federal labor laws. After updating the Overtime Hours Rules tab to reflect your companies’ business rules and to abide by state and/or federal labor laws and verifying the Pay Types Links subtask is correctly configured, which both can be found on the Timesheet Classes screen, along with changes within a few control screens in Time & Expense, you can ensure that your employees are documenting their time in accordance with your company’s policies and in compliance with any agreements you may have.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Government Regulations, Deltek Costpoint

While the cost principle is titled “Rental Costs,” it addresses the cost of renting and leasing real and personal property utilized in the performance of US Government procurement contracts and subcontracts. The way I read the cost principle, FAR 31.205-36(b) provides that rental and leasing costs are allowable with the following limitations:

Topics: Compliant Accounting Infrastructure, Litigation Consulting Support, Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR)