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.

In his State of the Union address, President Obama talked of the need to overhaul the way that the government does business in order to make it more efficient. He said,
“We live and do business in the information age, but the last major reorganization of the government happened in the age of black and white TV. In the coming months, my administration will develop a proposal to merge, consolidate, and reorganize the federal government in a way that best serves the goal of a more competitive America.”

The body which is responsible for overseeing the $530 billion in yearly government contracts is Defense Contract Audit Agency. Despite its name, DCAA is also responsible for civilian contracts as well as those for the Department of Defense.

DCAA has been the main authority in auditing government contracts for 46 years. Since it was introduced, the role of DCAA has expanded greatly. However, the staff of DCAA auditors has significantly decreased from the one-time high of 7,000 during the 1990s to the 4,114 auditors it has today. This is the current number after about 500 new auditors were added in the past two years.

After the President’s State of the Union address, the Senate Homeland Security and Governmental Affairs Committee held a hearing on February 1st to discuss the future of how government contracts are overseen.

Government watchdog groups promoted the need for the DCAA’s role to be increased. Some lobbyists even argued for the creation of a solitary, independent audit agency which would function outside of the pentagon and report directly to congress.

Nick Schwellenbach, the director of investigations for Project on Government Oversight, said in his argument, “Unlike most agencies, a new Federal Contract Audit Agency could save more money each year by uncovering waste and fraud than it would cost to run it. The FCAA would provide a needed check on contractors, ensuring that the government is not overcharged for goods and services.”

Despite the implications of Schewellenbach’s statement, DCAA still considers itself to be a good investment. In 2010, DCAA had a return of $5.10 for every dollar spent running the agency. The savings came to a total of $2.7 billion.

While this rate of return does show that DCAA is profitable, it is much less than the past high ROR of $50. Of course, supporters of DCAA could argue that there are fewer instances of fraud and overspending today because of DCAA audits, thus reducing the ROR compared to the past.

One the other side of the hearing argument were lobbyists from industry groups and the private sector. They argued that the role of DCAA shouldn’t be increased. Instead, there was a dire need to increase communication between contractors and auditors as well as increase the level of trust.

The President and CEO of Professional Services Council Stan Soloway said that DCAA auditors were too isolated.

“As most would agree, the quality of an audit and, more importantly, the effectiveness of any response to an audit are tied to the degree of communication that occurs among the parties before and after the audit itself.”

Soloway went on to criticize the current system of pass/fail which DCAA uses in audits. The system treats all deficiencies equally, regardless of severity. After issues are corrected, it can take months or even years before communication is received from DCAA auditors.

After the February 1st HSGAC Contracting Oversight Subcommittee hearing, the DCAA director, Patrick Fitzgerald has been on a media campaign to tout all the new changes he has implemented and how they have improved the quality of DCAA audits.

According to Fitzgerald, DCAA has saved about $3 billion with a “tightened net” which focuses on singling out defense contracts which are considered high-risk. About these “real savings,” Fitzgerald said,

“I mean there’s a lot of numbers thrown around sometimes, but these are savings determined by the contracting officer saying that they paid less for goods and services as a result of basing their negotiations on our audit reports.”
However, while DCAA may be saving money by forcing contractors to find cheaper alternatives to goods and services, the contractors are paying dearly while they stand by waiting for contracts to be approved.

The subcommittees ranking member Senator Scott Brown, R-Mass, addressed the how the slow audit process was affecting contractors.

“It is costing them real money, real dollars. So, in addition to the healthcare bill, the taxes they are paying, and the regulations they are dealing with, now they are facing audits.”

A year ago, DCAA was criticized because its auditors were purportedly too friendly with contractors. Now, while remedying this criticism and focusing more on high-risk contracts, DCAA has now lost communication with contractors.

When auditors cite deficiencies in a contract, they are no longer making the recommendations about corrective actions. This means contractors must rely upon their own analysts to search out remedies. By the time that deficiencies are corrected, it takes DCAA a long time to approve contractors.

With this pass/fail approach to DCAA audits, contractors are left idling because of minor problems. This idling is costing contractors real dollars in healthcare, managerial costs, taxes, and other costs. Additionally, the amount of lost income is enormous as the contractors often cannot bid on new DCAA contracts until they have been approved by their auditor.

The subcommittee hearing shed light on the need to improve the partnership between contractors and auditors. However, it missed an opportunity to discuss the critical changes needed to improve communication between DCAA contractors and auditors.

For what it is worth, DCAA director Fitzgerald has done a thorough job of addressing the identity criticisms of DCAA during his short tenure. Under his direction, DCAA has hired about 500 new auditors in two years. Instead of just using these auditors to nitpick details of contracts, the auditors are focusing on giving quality audits.

Fitzgerald emphasized that the job of the auditors was to focus on quality, not just quantity.

“To be a really good auditor, you have to be curious. You have to ask that follow-on question. You have to kind of look at things and see if you can connect the dots. Does it all make sense?”

This statement doesn’t include anything about an auditor’s job to communicate with DCAA contractors. While DCAA is on a good start internally, hopefully they will soon address the problems with the auditing process from an industry perspective.