There are many reasons why working for the federal government can be appealing, whether it is the benefits, the pay or simply because you wish to give something back to your country. But what branch of the government is best for you?

If you are thinking of working for the Defense Contract Management Agency (DCMA), there are many fulfilling careers for you to choose from. DCMA jobs are some of the most personally satisfying jobs out there. You can take pride that you are working towards the future of your country by helping its military be the best in the world.

You will be a direct part in equipping the military with the most state of the art, and up to date equipment, by being an active component of the department that negotiates for the best technology, supplies, weapons, tools, etc.

DCMA jobs are not simply careers in accounting or contract making, but also engineering careers, industrial and information technology specialists careers, and quality assurance careers, among other things.

The DCMA is always looking for a variety of different personnel, with different education and experience levels. Many entry-level opportunities will allow you to work your way up in a gratifying career.

The Defense Contract Management Agency headquarters are in Fort Lee, Virginia, however you could also be working out of Hartford, Connecticut; Oswego or Syracuse, New York; Twin Cities, Minnesota; Cedar Rapids, Iowa; or another of the forty-eight (48) Contract Management Offices (CMOs). You could even work in Afghanistan.

The benefits are worth having a look at, as well. From flexible working schedules, which allow you to retain a good work-life balance, to great employee benefits, to salaries that are competitive with the private sector, and paid holidays vacation and leave, you will find it hard to want for more.

The DCMA is not only interested in hiring the best personnel possible, but also in retaining them. And when you know your employer is standing firmly behind you wanting to make your life easier, providing the best work you can to your employer becomes second nature. Working for the DCMA you matter, not only as an employee, but to your country. Your work will help protect lives and your country’s freedom.

There are several ways in which you could find DCMA jobs. You could check the job opportunities listed on their website (http://www.dcmacareers.com). You could also apply at one of their career fairs, which you will also find listed on their website.

The DCMA has different special programs also outlined on their website. You may qualify for one of these programs and find yourself with one of the many DCMA jobs out there. It could very well become your lifetime career. In today’s unstable job market, this is an even more attractive prospect

If you have a federal contract or grant, you will probably be creating an Incurred Cost Submission. That is to say, a submission to the federal government to account for the costs you have incurred during a specific project. These include both direct and indirect costs and are usually due within six (6) months of the end of the fiscal year that your project was completed in.

As these submissions are detailed and complicated, it is recommended that you have an accountant, who is an expert in dealing with Federal Contracts, complete the Incurred Cost Submission. An auditor will verify your Incurred Cost Submission for accuracy, usually within twenty-four (24) months, so make sure that the math and other figures have been double or triple checked so you can be sure that everything is entered as it should be.

An adequate Incurred Cost Submission will follow these guidelines:

• It will possess a summary of the claimed Indirect Expense Rates (You will have already obtained this rate from the appropriate department.)
• It will include Indirect expenses properly categorized:
  •  General and Administrative (G&A) Expenses
  • Overhead Expenses
  • Occupancy Expenses
  • It should contain claimed allocation bases
  • It will have the computations for facilities capital cost of money factors
  • In the Incurred Cost Submission, you will reconcile the books of account and the claimed direct costs
  • It should include a schedule of direct costs by contract or subcontract and indirect expense applied at claimed rates
  • It should show the government participation in indirect expense pools
  • It will have a schedule of cumulative direct and indirect costs claimed and billed
  • It should show any subcontract information
  • On T&M/labor hour contracts, it will list a summary of hours and amounts
  • It should reconcile the total payroll to the total labor distribution
  • It should list all the decisions,  agreements, approvals, and the description of accounting and /or organizational changes
  • It should contain an adequately signed certificate of final indirect costs
  • It should include contract closing information for any contracts that were completed in this fiscal year

If you are an accountant or business owner preparing an Incurred Cost Submission for the first time, there are many classes and seminars available to help you understand how to:

• Apply and establish an indirect rate structure
  • Manage indirect rates
  • Identify unallowable costs and understand part 31 of the Federal Acquisition Regulations
  • Ensure consistent cost accounting
  • To determine the purpose of the Incurred Cost Submission and when it is required
  • Understand the Incurred Cost Submission schedule analysis
  • How to apply the Incurred Cost Submission

The Incurred Cost Submission process is a lengthy one that may take several years. The final negotiation of the final costs should take place within six (6) months of the audit completion.

Direct cost rates are rates that can easily be quantified within a contract. They include the cost of materials, wages of workers directly assigned to a project, subcontractors, etc. while indirect rates are rates that cannot be calculated without great effort.

You may need to calculate an indirect rate if you are awarded a federal contract (or grant) in which cost is reimbursed. It is a manner of assuring fair and equitable reimbursing across different businesses and organizations. Indirect rates are used for Incurred Costs Proposals.

Indirect cost rates are also known as indirect rates or Facility and Administrative rates (F&A rates). Though the Federal Acquisition Regulations (FAR) will recognize indirect rates grouped in any logical manner, they usually fall into one of three categories:

• Employee benefits

Costs involved in benefits of the employees, such as health benefits, paid leave, employee pension plans, etc.

• Overhead costs

Costs involved with running the company. Including research and development, shared facility costs, heat and electricity, etc.

• General & Administrative costs (G&A costs)

Costs associated with the management of the business. This includes office space, salaries for management where management overlooks more than one project, salaries of workers that are shared between projects, etc.

If your business needs to know its indirect rate in order to receive a federal grant or contract, the specialist handling your contract should contact the proper organization as it becomes clear that your organization may be receiving the contract or grant. This indirect rate should be valid for one year. After this, a new rate may need to be calculated. It is recommended you contact an accountant with experience with federal contracts to prepare an indirect proposal.

Many factors will affect your indirect rate, some of these are:

• The type of business
• The size of your business
• How old your business is
• Where your business is located

Indirect rates when dealing with the Defense Contract Audit Agency (DCAA)

According to the Federal Acquisition Regulations (FAR), you require to submit your proper Incurred Cost Proposal within have six (6) months of the end of your business’ fiscal year. If you fail to submit this proposal, the Defense Contract Audit Agency (DCAA) will remind you several times until it becomes due. Once it becomes due, the Defense Contract Audit Agency (DCAA) could decide to make a unilateral recommendation based on historical indirect rates for similar contractors, or other factors. It is in your advantage to avoid this and take the steps necessary before this is to happen.

After an adequate Incurred Cost Proposal has been received, an audit will be performed, the results of which will be discussed with your business.

It is important that the data you submit in your Incurred Cost Proposal is accurate. Mischarging could result in criminal penalties. Consulting an expert with federal contracts who has experience with incurred rates is in your best interest to make sure that your proposal is not only correct, but to your best advantage.

In the private sector, contracts can vary greatly and are regulated only as far as they relate to the legality of the services or products being offered, and in that both parties consent to the contract. Otherwise, technically, two private individuals have virtually no restrictions on the content of their contracts.

When dealing with the public sector however, it is not as simple. This is because the government must maintain an inscrutable level of integrity and transparency.  Since they are dealing with public money and trust, regulations for federal contracts are very strict and tightly controlled.

That being said, things are not quite as black and white as outlined above. The Uniform Commercial Code (UCC) covers many contracts made in the private sector. Though, it is a different set of regulations to what controls federal contracts. Federal contracts are regulated by a large set of rules and guidelines that includes the Federal Acquisition Regulations (FAR) and its supplements. The interesting thing about this is that if the government contractor hires a subcontractor, this subcontractor might very well be accountable to the Uniform Commercial Code (UCC) while the middle contractor will still be accountable to the Federal Acquisition Regulations (FAR), its supplements, and any other government regulations. This can make the already difficult to navigate bureaucracy even more complicated.

Federal contracts are procured through a contracting officer who has been issued a proper warrant. The process of acquisition for the federal government has many steps, starting with the acquisition planning (which is described in the Federal Acquisition Regulations (FAR) and Far supplements). Planning is reliant on the needs dictated by the country’s current circumstances. For example, in a time of war, quantity may be more important than quality and this would be reflected in the planning. Many other factors should be examined in the planning step.

Federal contracts are not always handed to the lowest bidder, instead, Source Selection Criteria (SSC) are put into place. These criteria are in place to help determine which contractor provides the best value and will fulfill the government’s needs best. Like most criteria and regulations involved in securing federal contracts, the SSC are outlined in a few different provisions of the Federal Acquisition Regulations (FAR).

If you wish to obtain a federal contract for your business, there are many things you will need to keep in mind and you must understand that it is a long process, but of course, like any big contract for your business, it can be very rewarding. There are many resources available to help smaller business understand how to navigate through the difficult process. There is also some good news for small businesses; some of the regulations in place are to make sure a percentage of federal contracts are awarded to businesses just like yours.

Cost accounting is the practice of anticipating for the costs associated to running a business or producing a product.  Since many costs can be flexible, it is not an exact science but when dealing with large volumes, the price distortions were generally not very big.

Since cost accounting relates directly to a business and its managers, the practice varies greatly from company to company and even from department to department within the same company. Unlike general accounting, the figures in cost accounting do not generally need to be compared to those of other companies and as such, there is no reason why a uniform method needs to be used. Cost accounting is not governed by general rules and principles such as the Generally Accepted Accounting Principles (GAAP). Though generally businesses will chose one of a number of general methods such as standardized, activity-based, lean, etc.

However, in the case of a company who is contracting to the Government, cost accounting standards (CAS) were put into place due to the difficulty the previous lack of standards posed for conducting general internal audits of defense contractors. These standards also assured agreement and integrity in understanding and applying cost to Government contracts.

Though the General Accounting Office (GAO) was asked by congress to study the possibility of instating such standards in 1968, the cost accounting standards (CAS) were not implemented until 1980.

A Government contractor will probably need to submit a disclosure statement, which is “a written description of a contractor’s cost accounting practices and procedures.” [48 CFR 9903.202-1(a)] Though what needs to be included in this disclosure statement depends on a few factors, including the value of the contract. The disclosure statement must be complete and compliant. That is to say, it must not only properly explain the contractor’s cost accounting practices, but these practices must also be compliant to the cost accounting standards (CAS). The disclosure statement will be reviewed by the contract auditor.

In the Department of Defense (DOD), the cost accounting standards (CAS) are audited by the Defense Contract Audit Agency (DCAA).

It is important for a business who will be dealing with these agencies in a contractor capacity to be familiar with the cost accounting standards (CAS). In the case where you, as a contractor, are not compliant to these standards, a revised disclosure statement will need to be provided outlining the changes that will be made as well as the impact those changes will make on the contract costs within sixty (60) days from the time the disclosure statement was found to be non-compliant.

Though it may seem like a headache to comply to these standards when your business may already have its own cost accounting practices that differ from the cost accounting standards, it is easiest to become familiar with these standards so to facilitate the procurement of a federal contract. You can also feel good to know that the costs in your business’ bid will be judged in a manner that is uniformed with other bidders.

If you or your company has been fortunate enough to win a government contract you will have to be  able to remain compliant with the Defense Contract Audit Agency.  There are some important steps that you can take to ensure that you and your company will not have any problems if and when you face an audit.

In order to show your compliance your company needs to have documented policies and procedures that are strictly followed.  You must also have a system in place that keeps track of hourly labor charges.

Costs need to be collected and accumulated separately in different sections such as direct and indirect costs, accounting costs, billing costs, human resource costs, to name a few.  These costs need to be documented at all times so that your company stays on top of all monies.  These costs should be published in a report no less than on a monthly basis.

Timekeeping

Only a person in a supervisory role should sign and approve all timecards.  Your company should have a policy in place that covers timecards, which states in effect that it is the employee’s job to ensure that their timecards are accurate and if they are not they could face disciplinary action through the company or by any relevant government regulations.

Is Software the Answer?

Many companies will offer software that they will claim will make your company DCAA compliant just by installing it.  However, this is not the case.  Your company still has to keep policies and procedures in place in order to keep employees on the right track.  There is no use of investing in the software if employees do not follow company rules to ensure compliance.

What the software that is available does for a company is help to keep track of various reports that the DCAA wants to see during an audit.  These include comprehensive time and labor reports, effective cost cutting and allocation methods, and an easy to follow chart of accounts.  What is important to remember is that the software is to be used as a device to aid in your company’s compliance not to supplant any rules and regulations that you have already put in place to keep compliant.

Stay Informed

When you or your company do business with the government it is important that you know all of the ins and outs.  It is up to you to stay on top of any changes that DCAA makes in how it operates.  One additional resource that you can use is to get a copy of the DCAA Contract Audit Manual (CAM).  This is an instructional manual for auditors that work for the government and discusses the standards of how to conduct an audit and what to look for.  This manual is available for free download online and due to its size, over a thousand pages, it is easier stored on a computer than on your desk.

Just by following a few simple steps and ensuring that your company and employees adhere to the standards that are set by your company and by the government you should not have any problems when facing an audit.

When you are in the running to win a government contract the DCAA will perform a preaward survey of your business to determine if it is capable of perform all the duties that the contract entails. Their main focus will be on two categories. First, they will want to ensure that if your company is awarded the contract that it has the financial means to complete all the tasks that are required. Second, they want to check if your accounting system is good enough to keep track of all the costs properly that are required by the contract.

Preaward Financial Survey

To determine if your company is financially viable to complete the contract the DCAA will want to look at certain documents to include cash flow forecasts, the company’s financial history, financial reports given to stockholders and banks, SEC fillings, any loan agreements with statements showing your good standing, and employee federal payroll tax returns. After fully reviewing this information the auditor will make their recommendation of whether they feel that your company is financially stable enough to fulfill the contract. If your company is considered not to be financially viable, you will be notified immediately and you will told of where you need to correct the deficiencies that the auditor found.

Preaward Accounting Survey

A DCAA preaward accounting survey will consist of the auditor determining if your company’s accounting system for accumulating costs complies with what the government requires when awarding a contract. The preaward survey is not as in depth as an actual audit, it will be limited to the auditor getting a working knowledge of your accounting system to see if it is acceptable under the governments standards for cost accumulation.

If your accounting system is deemed unacceptable for use the auditor will notify your company and the DCAA along with recommending solutions so that your accounting system will become acceptable. It is up to you to make the necessary adjustments to your accounting system to make it acceptable. Once you have followed through on the auditor’s recommendations you will need to contact the DCAA so they can perform a follow up audit.

Be Prepared

It is up to you to be prepared for the DCAA. You know when you are going to be bidding on government contracts, so why not get everything you need in order before you bid on any contracts? This will save you time and money in the long run and make any preaward surveys go much smoother than if you are trying to get your company in compliance at the same time as being surveyed. That will only reflect badly on your company and perhaps decrease your chances of winning a government contract in the future if your company becomes known to DCAA auditors as one that does not have it together. Become familiar with the process and you will find that it is not as daunting a process as it appears.

Contracting officers request a Preaward Audit in order to understand the accounting system which is being used by a government contractor. Many government contractors are stupefied to find out that their accounting system isn’t adequate, even if the books are being meticulously kept.

For the DCAA, it isn’t enough just to keep good records though. The DCAA wants to make sure that government contractors are keeping accurate records in a reliable manner. The DCAA Preaward Survey will be looking at the government contractor’s accounting in four areas:

• Proper tracking and segregation of costs
• Billing and timekeeping systems
• Internal controls
• Accounting performed in accordance with GAAP

The SF 1408 evaluation checklist gives a detailed list of what DCAA auditors are looking for in an accounting system. However, this is not the only system used to determine whether a contractor’s accounting system is adequate. The DCAA auditor must determine whether the accounting system will be able to give reasonable information in terms of cost projection for the completion of the project.

Potential government contractors should be aware that their present accounting system is taken into use. However, it is acceptable to DCAA to plan for the use of a different accounting system if the contract is awarded. This is because DCAA realizes that the contractors’ current projects might not require such a detailed accounting system as a government project.

In this case, the contractor must be able to show in the Preaward Audit that the accounting plan is operable. That means that it can quickly be put into use and that the employees are capable of using it. Unless you are hiring outside help for the DCAA Preaward Audit, it is recommended that you simplify the requirements by already having the accounting system planned for use during the DCAA contract in use.

If the accounting system used by the contractor is not DCAA satisfactory, DCAA will notify the contractor as well as the procurement official. While DCAA often will recommend how to correct any deficiencies with the accounting system, it is up to the contractor to fix the problems and come up with a new accounting system. A new Preaward Audit can be requested once these deficiencies have been corrected.

In some situations, a DCAA Preaward Audit is not done of the accounting system. However, an audit of the accounting system can still be performed even after the contract has been awarded. Also, even if you pass a DCAA Preaward Audit and are granted a government contract, always be prepared for additional auditing at any time. The DCAA auditor may decide to initiate another audit if he/she decides that additional auditing is necessary to make sure the contract is being fulfilled.

DCAA auditors are not just looking to see if a contractor’s accounting system meets a checklist. The DCAA auditor takes under consideration the Generally Accepted Accounting Principles, or GAAP, and will perform various tests to make sure that the accounting system is in accordance. Here are the areas that a DCAA auditor will be looking at:

Controls
It is crucial that a contractor have full control to direct charging of all indirect expenses and vice versa. It is very helpful if the contractor can show, via flowchart or other diagram, how the expense flows from the order to the actual purchase requisition. With service expenses, a contract or letter of engagement is very helpful to show whether the costs are direct or indirect.

Job Cost Ledger
The contractor is required by DCAA to have a subsidiary job-cost or accounts receivable ledger. This ledger must accumulate costs by the contract at the level that was in the contractor’s DCAA proposal.

Pools
All indirect contract costs must be grouped logically together. Further, these groups, or pools, must be assigned based on the benefits to other pools or to other contracts.

General Ledger
All costs must be accumulated under the control of a general ledger. This general ledger must be in agreement with the general ledger.

Timekeeping System
Even though the requirement of a timekeeping system seems simple, this is usually a problem for contractors. DCAA regulations require that all employees prepare timesheets and the timesheets must be signed by the employee and his/her supervisor.

Labor Distribution System
DCAA requires that a labor distribution system allocate direct and indirect labor costs to objectives and to the employee. The labor distribution must also adhere to a payroll system and the general ledger.

Monthly Posting
Contractors are required by DCAA auditors to post costs at least on a monthly basis. This includes all costs including direct and indirect.

Exclusion of Unallowable Costs
Not all costs are allowable by DCAA and the contractor must exclude them using a system. It is not enough simply to not list these costs. FAR Part 31 defines which costs are allowable and which are unallowable.

Segregation of Costs
Some DCAA contracts require that the contract’s costs can be identifiable by item and unit as though each item were part of a separate contract. For example, manufacturing contracts may be required to segregate costs by preproduction.

Interim Billing
According to DCAA, interim billing must be prepared by contractors of direct costs, other than unallowable costs.

Full Operational Capacity
The DCAA auditor will determine whether the accounting system is in full operational capacity. In some cases, the contractor may not be using the accounting system proposed for the contract and the DCAA auditor will report this. The auditor will then determine whether the proposed accounting system is acceptable and may recommend that a follow-up DCAA accounting audit be performed.

Your DCAA timesheet may be one of the most demanding tasks when it comes to surviving an audit.  However, it isn’t enough for just you to understand the DCAA timesheet regulations.  Many firms fail audits because of problems their employees make.  This can be avoided with a good training program.

The first thing that employees need to understand about their DCAA timesheets is that they, the employees, are responsible for them.  No one else is allowed to fill in his or her timecards.  After clocking in and out, the employees must turn over the DCAA timesheets to a supervisor for approval.  The timesheets will then be signed by the employees and the supervisor.

If an employee is out on travel status, then the employee’s supervisor has the right to prepare the DCAA timesheets.  However, when the employee returns, the employee must submit his/her timesheets and attach them to the ones which the supervisor prepared.  Only if the employee is away for extended authorized periods of time is the supervisor allowed to complete the employee’s DCAA timesheets.

It is important that employees understand that it is their job to keep accurate DCAA timesheets to a minimum of 1/10 of an hour.  If they fail to do this, then they are subject to disciplinary action as part of the company policy.  Even though your employees are responsible for their own timesheets, you as a business owner are responsible for making sure that they comply with DCAA timesheet regulations.  If a DCAA auditor finds some discrepancy or error in the timesheets, then you are the one to blame.

Remember that the most important part of your DCAA audit has to do with timesheets and accurate cost-tracking methods.  In order to make sure that you are in compliance with DCAA timesheet regulations, you will need to train your employees and make sure that they understand the rules and policies as well as the consequences.

If you are using DCAA software for your timesheets, you must also make sure that all your employees are trained on how to use it.  When choosing your software, you will want to take into consideration whether or not it has a training program included and how easy the DCAA timesheets software is to use.  Timekeeping can become very complicated because of overtime, employees offsite, and other issues.  The DCAA has many different training courses on their website, which can help with DCAA timesheets compliance.

Remember that, even if you are familiar with DCAA timesheets regulations, it doesn’t mean your employees are.  Make sure they are trained so you don’t fail your DCAA audit because of timesheet problems.