Three Things You Will Need When You Become A Government Contractor
When you think of government contracting, you likely picture a large mass of red tape. While it is true, there are numerous compliance requirements your company needs to meet, and demonstrate you can meet, and that your systems can meet, and that your employees know the procedures they must follow to meet, there are thousands of companies meeting these requirements every day, and they are making a profit in the process.
Why go through the hassle? What would have to change in the R&D, assembly or manufacturing processes? Can compliance be injected into current systems and processes? How can teams possibly track everything that is needed to indeed demonstrate compliance?
The good news is that there are a lot of resources, many free and readily available directly from the US government, to help you understand what is needed at the start and every step of the way as you take on this endeavor. There are also a lot of consultants and many who can speak from experience. There are even sites that help you find government contracts based on your search criteria.
One thing that does not exist – a common profile of a typical government contractor. Numerous companies of all sizes, start-up and well-established, east coast to west coast, services and manufacturing focused, public and private, make up the database, which the US government, the largest spender in the world, turns to when it needs new software code, a satellite thrown into space, or a test to discover how certain compounds react to extreme temperatures.
Why do you need grit? It can be a different culture, there can be market uncertainty and the government can cancel a contract without warning. Starting as a subcontractor to a prime contractor may be a good way to test the government contracting waters.
So is the red tape worth it? That is something only you can answer. However, government spending is currently high and Federal IT Modernization is underway. There appears to be a lot of opportunity. (Here’s a great TED talk on Grit.)
#2 A Project Based Accounting System or Enterprise Resource Planning (ERP) System
Any accounting solution will work, however, a project based accounting system or ERP solution can help prevent the government contract project from becoming a vacuum sucking up time and resources not originally accounted for due to unexpected data calls or urgently needed up-to-date project status reports.
Why do you need it to be project based? Because each contract acts as project and all underlying costs, from labor to parts to subcontractors must be properly pooled, accounted for and detailed, based on the project – from the start. Indirect and direct costs, cost pools and time keeping need to be reported on a project level. There is no intermingling. There is no estimating. Things, think labor time and inventory movement, need to be recorded. Things, think purchase orders, insurance forms and agreements, need to be documented, saved and readily accessible.
Government contractors need an accounting system that can break down the numbers into a organization, account and project level. These three levels are needed company wide – across finance, project, manufacturing, procurement and other areas. This system should include content management capabilities and a means of restricting access to data and projects.
#3 Integrated Company-Wide Compliance Support
Compliance is not something to backtrack and add as requirements from a Contracting Officer arrive. Compliance is heavy on processes and the tracking of and employee knowledge of what should be done, when and where. Similar to three-tiered or project level accounting, compliance needs to be incorporated from the start. The very process of bidding on a contract can reveal the government’s expectations. Why does the US government have so many compliance requirements? Because they need to know you can do what you said you can do, at the level and price as agreed.
Compliance requirements range from pricing to separation of parts, to employee nationality. While many systems say they are compliant, there is no seal of approval. Only when employees input the data and follow the processes the system requests, will the system help you meet your compliance needs.
The DCAA, or Defense Contract Audit Agency, has checklists and tools to help you from the pricing proposal to the incurred cost audits.
You can think of compliance in two ways, it is extremely tedious and costly; it is a differentiator. The right accounting solution will help you see it as a competitive differentiator.
One Example of an Accounting System / ERP Solution Designed for Government Contractors
Costpoint is an integrated solution meant to grow with your business. Compliance support and project-level data coupled with innovative flexibility and robust security, comprise the backbone of Costpoint. Below are eight ways Costpoint helps you work through compliance requirements by streamlining and automating processes throughout the project life-cycle to help you successfully deliver on your first government contract and many thereafter.
Business Intelligence with Built-in and Ad-hoc Dashboards
Beyond the typical data-driven decision making, government contractors’ data needs may involve project metrics such as EAC or estimate at completion, and indirect and direct cost reports. Those in manufacturing will need to know details on their parts down to serial number traceability, costs and forecast costs – both labor and material, and the impact of an engineering change, before enacted. Check out the business intelligence Costpoint provides.
Project Accounting with A Variety of Built-in Financial and Project Management Reports
As previously mentioned, getting to the costs and margins at the project level is imperative for government contractors. Costpoint is designed for project-based businesses handling government contracts. From organization and project security options, to type of contract, you can configure Costpoint to align with your business needs while automating and streamlining processes. Discover more about Costpoint’s project accounting capabilities.
Innovative Technology Platform with Capabilities Available Ahead of Need
Costpoint cloud is exemplary of Deltek’s commitment to industry. Teams focused solely on cloud are looking at artificial intelligence, machine learning and blockchain among other technologies, to ensure the ability to anticipate and meet market demands while helping customers with the constant state of their digital transformation. On top of data privacy and cyber security, Costpoint helps government contractors meet the requirements of numerous compliance frameworks such as Defense Federal Acquisition Regulation Supplement (DFARS), National Institute of Standards and Technology (NIST), FedRAMP and soon, International Traffic in Arms Regulations (ITAR). Learn more about Costpoint's innovative platform here.
Vendor Management with Robust Procurement and Subcontractor Management
Costpoint Vendor Management helps companies securely manage vendors and subcontractors across their business, source to pay, to help them reduce supplier risk, shorten cycle times and reduce costs. Integrated automation starts with data flowing from GovWin IQ into Costpoint where business development, contracts, projects, procurement, and finance teams can automate processes - including subcontractor time keeping - to reduce data entry and improve accuracy, ultimately reducing cycle times for quicker time to invoice. The new Costpoint Supplier Portal enables and houses bi-lateral supplier communications to better track purchase orders and soon, invoices. See more about Costpoint Procurement.
Flexible Project Management and Planning
Costpoint Planning provides a complete solution to help you gain greater insight, track and report on budgets, forecasts and resource utilization all in real-time, throughout the entire project life-cycle. With Costpoint Planning you have one, centralized, project-based system that allows you to have all project information, including contract requirements, in one location, with access and analysis at the right level of detail. Data is updated in real time throughout the life of the project, keeping all teams current on project status, EACs and ETCs (estimate to completion). You can quickly and precisely review actuals and forecasts, utilize user-configured approval workflows to keep projects moving, manage subcontractor resources, statements of work, and overall spend as well as reduce risk and have one single version of the budget for your entire team. Easily comply with contract requirements using Resource Planning and Resource Management that is strategically focused with detailed project-level capabilities. Discover more about Costpoint Planning.
Holistic Contract Management
Costpoint Contract Management is a solution designed to help Contract Managers manage opportunities, contracts, subcontracts and related compliance requirements such as DFAR clauses, Organizational Conflicts of Interest and vendor performance in a single solution with an emphasis of making the post-award process more efficient and accurate. Learn more about Costpoint Contract Management.
Costpoint’s innovative manufacturing solution solution is fully integrated, and helps you capture a system of record all in one system. Costpoint Manufacturing Execution System (MES) and Shopfloor Time offer additional quality and labor management capabilities, holistically supporting digital thread initiatives, continuous improvement processes and compliance requirements. Costpoint securely pulls all of the manufacturing information together, seamlessly integrating it with finance for real-time cost and performance analysis down to the project level.
Intelligent Time and Expense and Human Capital Management Capabilities
With the release of Expense Wizard, creating a guided workflow with validations of entry throughout the expense process, and the new Mobile Time app, customers are experiencing Intelligent Time and Expense. We’ve partnered with DEEM to deliver an integrated travel booking and expense solution. Learn more about Costpoint's very popular Time and Expense solution.
Costpoint’s Human Capital Management solution helps you simplify workforce management by removing the guesswork from capacity planning to streamline time and leave management.
Government contracting is not easy. However, with the right accounting solution and perhaps the right amount of grit, getting into government contracting may be a very good decision.