Guide to Government Contracting Compliance
Compliance policies show a government contractor’s corporate commitment to following federal and state and local government rules. They demonstrate consistency in how a government business and its staff behave and can lower risk of exposure. Solid policies can reduce non-compliance in government procurement programs and define standards for timekeeping, travel, delegation of authority, accounting, estimating, billing and labor. They can even dictate how future policies can be drafted to address new mandates from the government.
Government Compliance Oversight Agencies
Every government agency has a set of standards that informs their policies on compliance. A majority of contractors look specifically to two federal sets of government rules as the basis for their compliance: Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS).
- Federal Acquisition Regulation defines government procurement, the primary set of rules agencies use when purchasing goods and services.
- Cost Accounting Standards was created to drive consistency within and between contractors’ cost accounting practices. These include measurement of cost, assignment of cost to the cost accounting period, and allocation of cost to the cost objective.
Department of Defense Compliance
The Defense Contract Audit Agency (DCAA) is responsible for auditing Department of Defense (DoD) contracts, but other agencies also ask it for auditing assistance. Audits assure the government that your organization is following the rules. The DCAA and other federal auditors use FAR and CAS standards as the basis to assure the government that a business is operating within approved parameters, specifically as they apply to finance and accounting systems. To that end, Deltek has purpose built solutions like Costpoint to address these standards within its functionality and capabilities to keep government contractors in compliance.
The DCAA is not the only entity responsible for auditing Department of Defense (DoD) contracts, however. The Defense Contract Management Agency (DCMA) also defines and monitors the practices of government contractors. They ensure businesses are complying with all contract terms from award to contract closeout.
Other Forms of Government Contracting Compliance
Beyond the DoD, contractors may encounter a review from the Inspector general (IG), who examines the actions of a government agency as a general auditor to ensure compliance with generally established government policies, security policies and misconduct rules. Audit agencies also exist within the U.S. Department of Housing and Urban Development (HUD), the U.S. Environmental Protection Agency (EPA), the U.S. Department of Labor, and the National Aeronautics and Space Administration (NASA).
Common Types of Government Audits
- Incurred Cost: Review of the accounting practices and systems, ensuring that costs charged are allowable, allocable and reasonable
- Pre-Award Survey: Standard Form 1408 - A look at the contractor’s accounting system and procedures, cost management, timekeeping, labor and billing
- Defective Pricing: Ensures that cost and pricing data are current, accurate and complete
- Forward Pricing: A check of contract pricing rates to determine a fair and reasonable basis for negotiating a cost proposal
- Compensation and Benefits: Review of a contractor’s compensation system and related internal controls
- Contractor Purchasing System Review (CPSR): To gain an understanding the contractor’s purchasing system and related internal controls
- Labor Charging/Floor Checks: Check for mischarges, fraud and cost shifting, and a general check for accounting policy compliance
Defending Sensitive Data with Department of Defense Cybersecurity Compliance
The Department of Defense is currently in the process of defining and assessing the strength of government contractors’ cybersecurity with the introduction of the Cybersecurity Maturity Model Certification (CMMC) and the statutes involved with International Traffic in Arms Regulations (ITAR). Each has specific compliance standards that are currently being implemented within the industry.
- CMMC compliance involves a combination of various cybersecurity standards and best practices. The model’s creation was supported by the Department of Defense (DoD). Learn more about CMMC Compliance »
- ITAR is a regulation to restrict and control the export of defense and space-related articles, technologies and services to safeguard U.S. national security and foreign policy objectives.
How Deltek Helps Government Contractors to Stay Compliant
Centralizing the management of projects, people and finances improves operational efficiency and provides real-time insights to support compliance and security needs. Deltek understands what oversight agencies like the DCAA are seeking with an audit and has an easily accessible repository of resources to address each audit need. Support for FAR, CAS and DCMA compliance needs is woven into the fabric of Deltek government contracting solutions, and our integrated cloud offering enables the secure storage of your data, as defined with NIST 800-171 controls, DFARS 252.204-7012, FedRAMP Moderate Equivalency, ITAR and future plans for CMMC compliance. From securing a contracting opportunity to final delivery, Deltek has made compliance a priority for every stage of the project lifecycle.
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