This guide explains the compliance frameworks every government contractor must navigate — from FAR and CAS to DCAA audits, CMMC, and ITAR — and what each requires of your systems and processes.
Why it matters: Non-compliance can result in disallowed costs, failed audits, or loss of contract eligibility — making a working understanding of these standards essential for any GovCon business.
Key Takeaways
- GovCon compliance spans multiple federal frameworks: FAR and CAS set the foundation, while DFARS, DCAA audit requirements, and CMMC each add additional obligations depending on your contracts.
- DCAA audits cover more than accounting: Incurred cost, timekeeping, defective pricing, and pre-award surveys all fall within scope — contractors must be prepared across all of them.
- Purpose-built ERP reduces compliance risk: Deltek Costpoint has FAR, CAS, and DCMA compliance built into its core, and Costpoint GCCM holds FedRAMP Moderate Equivalency status for secure cloud data storage.
What is Government Contract Compliance?
Government contracting compliance is the practice of adhering to federal, state, and local rules governing how contractors operate when doing business with the government.
Compliance policies set consistent standards for how a business and its staff behave — covering timekeeping, accounting, billing, estimating, travel, and labor — and lower the risk of regulatory exposure.
For government contractors, strong compliance isn't optional: it determines eligibility to win and retain contracts, shapes how costs are tracked and reported, and defines how a business responds to audits. Well-designed policies also provide a framework for addressing new government mandates as they emerge.
Federal Acquisition Regulations and Cost Accounting Standards
Every government agency has a set of standards that informs its compliance policies. 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 measuring cost, assigning cost to the cost accounting period, and allocating cost to the cost objective.
DFARS Compliance
The Defense Federal Acquisition Regulation Supplement (DFARS) is a supplement to the FAR and applies to the Defense Industrial Base (DIB).
Government contractors working with the DoD supply chain must adhere to DFARS requirements, which are in addition to FAR requirements.
DFARS clause 252.242.7005 defines "acceptable contractor business systems" with six clauses, including the accounting system clause 252.242.7006, which government contractors must comply with if specified in the contract.
Federal Government Auditing Agencies
The Defense Contract Audit Agency (DCAA) is responsible for auditing Department of Defense (DoD) contracts and other federal entities responsible for acquisition and contract administration.
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 ERP software for government contractors to address these standards within its functionality and capabilities helping 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 government contractors practices. They ensure businesses comply with all contract terms from award through contract closeout.
Free Guide
Your Guide to Understanding DCAA Compliance
Learn what the DCAA does, what types of audits it carries out, and how to get and stay compliant.
Other Forms of Government Contracting Compliance
Beyond the DoD, contractors may face review by the Inspector General (IG), which serves as a general auditor to examine the actions of a government agency and 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 looks 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): A CPSR is used to gain an understanding of the contractor's purchasing system and related internal controls
- Timekeeping and Labor: Time must be charged by day and by project and/or indirect accounts. Employees must record all time worked on projects to the proper job numbers and codes.
Defending Sensitive Data Across The Federal Government Supply Chain
The Department of Defense is currently defining and assessing the cybersecurity of government contractors through the introduction of the Cybersecurity Maturity Model Certification (CMMC) and the International Traffic in Arms Regulations (ITAR). Each has specific compliance standards that are currently being implemented within the industry.
- CMMC: Compliance with CMMC involves a combination of various cybersecurity standards and best practices. The model's creation was supported by the Department of Defense (DoD).
- NIST SP 800-171: Government Contractors storing non-classified sensitive data should meet baseline security requirements to support FAR clause 52.204-21.
- FedRAMP Moderate Baseline: Costpoint GovCon Cloud Moderate (GCCM) has completed its FedRAMP Moderate Equivalency assessment and is listed on the FedRAMP Marketplace.
- ITAR: This regulation restricts and controls 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 project, people, and financial management improves operational efficiency and provides real-time insights to support compliance and security needs.
Deltek understands what oversight agencies like the DCAA seek in an audit and provides an easily accessible repository of resources to address each audit need.
Support for FAR, CAS, and DCMA compliance requirements is woven into the fabric of Deltek government contracting solutions, and our integrated cloud offering enables the secure storage of your data through the implementation of NIST and ITAR controls and monitoring of proposed CMMC rules.
Additionally, Costpoint GovCon Cloud Moderate (GCCM) has completed its FedRAMP Moderate Equivalency assessment and is listed on the FedRAMP Marketplace.
