Redstone Government Consulting Blog | Small Business Compliance (8)

“A sound internal control environment, accounting framework, and organizational structure” is criteria number one in DFARS 252.242-7006 Accounting Systems. In fact, all six of the business systems identified in DFARS 252.242-7005 Contractor Business Systems, or commonly known as the “DFARS Business Systems Rule”, references adequate internal controls and the reliability of data. Even more far-reaching than DFARS is that FAR, adhered to by most, if not all US Federal Government agencies, requires adequate contractor internal controls over financial data relied upon for acquisitions. For the purposes of this blog, we shall focus primarily on the DFARS Business Systems Rule as it applies to defense contractors because of the activities of DCAA.

Outsourcing certain administration functions within an organization has become a trending practice among government contractors. In fact, we have seen a noticeable uptick in outsourced accounting, human resources and contracts administration functions over the past year.

Whether a company chooses to outsource a certain administrative function to fill a temporary void or a permanent one, looking to subcontractors for help makes sense for a number of reasons.

Our partnership with Unanet has benefited a lot of our clients in a multitude of different ways. Not only are our consultants trained and certified to implement the software for our clients, we can also provide a variety of other types of Unanet software support to add value to the software system, accounting environment, and project management. Below are a few examples.

In today’s budgets constrained environment U.S. Government contracting officers are seeking every opportunity to obtain discounted or reduced prices for services and materials, and as a tax payer that should make us all happy. However, for those of us who work in the government contracting industry the sight of LPTA solicitations, and enhanced scrutiny of proposals does make work life more challenging. One of the areas that we see challenged by contracting officers either during the proposal process or after award is the application of G&A on direct travel associated with the contract. This might be a solicitation provision, a Government expectation for contractor concessions during negotiations or a Government interpretation after contract award.

A question we are frequently asked is “Do small contractors really need written policies and procedures in place to pass....”   This is finished with many types of audit - pre-award accounting system, post award accounting system, or even purchasing system?

As a follow-up to our June 2015 blog on the now really infamous OPM computer hack of 2015 (which might actually date back to 2013 based upon the fact that OPM’s story continually changes) we now know that approximately 21 million personnel records have been compromised.  However, we can all sleep better at night knowing that the action was technically not a cyber-attack because there was purportedly no attempt to take over the systems; hence, “merely” infiltrating (hacking) the systems to gain access to sensitive data including that related to background investigation.

A common misconception occurs when the term “DCAA-compliant accounting system” is used to describe a particular brand of accounting software. Sure, some accounting software systems and its components are designed specifically to address compliance with government regulatory requirements. But just because you buy it and use it does not mean you automatically have a compliant accounting system. There are several requirements of the accounting system and its environment that must be in place to ensure DCAA compliance, and there are a multitude of ways to meet these requirements without a significant investment in the purchase, implementation, training, and maintenance of a really expensive accounting system. Small businesses looking forward to bidding on prime, cost-type contracts must maintain DCAA compliance while also being as cost effective as possible to keep indirect rates at a competitive level. There are many options to choose from, and business owners must determine the best fit for their company. Be sure to consider all of the options:

This article is under review as a result of EO 141713, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, signed by President Trump on January 21, 2025. As we await further information from OFCCP and the courts, please reference this article for current status and action items.

Though multiple legislative efforts have failed in amending Title VII to include sexual orientation and gender-identity to the list of protected classes which cannot be discriminated against, President Obama’s Executive Order (EO) 13672, signed on July 21, 2014, and the subsequent guidance issued by various government agencies leaves government contractors with changes to make in this arena.  Like EO 11246, Equal Employment Opportunity, issued in 1965, it impacts virtually all government contracts with a very low threshold of $10,000 or more in federal contracts or subcontracts.  Exclusions are few and unaltered as currently stated in the regulations, 41 CFR 60-1.5.

Congratulations! You have won your first prime federal contract – now what do you do?! Unfortunately, regardless of how many contracts a company has won, the focus seems to be on “the win” and NOT how a company is going to manage and administer the contract. Larger companies’ that have been around for years have figured out through the “school of hard knocks” (i.e. Government audits, ACO cure notices, contract terminations, debarments, system inadequacies, etc…), how to comply with all the federal laws and regulations that are inevitably part of the Federal government contract you were just awarded.

Not only do you get to pay for the audit, you get pay for the CPA to support an audit of the audit!