For companies in Government Contracting, timekeeping is not just an HR or payroll task. It is a core internal control that directly affects labor charging, invoice accuracy, indirect rate calculations, and audit readiness. A weak Hour Timesheet process can lead to misallocated labor, delayed billing, compliance findings, and unnecessary risk during a DCAA review. A…
DCAA audit preparation starts long before an auditor requests records. For government contractors, labor is often one of the most closely reviewed cost areas, which makes accurate timekeeping, clear charge codes, documented approvals, and organized records essential to audit readiness. Under FAR 31.201-2, contractors are responsible for maintaining records that show claimed costs were incurred,…
A teaming agreement that wins you a contract can also be the document that costs you your small business status — if it’s not structured correctly. I’ve seen it happen to contractors who did everything else right. They had compliant timekeeping, a clean accounting system, and a solid past performance record. They teamed with a…
The incurred cost submission deadline doesn’t move. But for most small contractors, the preparation process still looks like it did twenty years ago. I’ve sat with contractors in the final weeks before their incurred cost submission was due — spreadsheets open across three monitors, a stack of reconciliation notes from the prior year serving as…
The contractors who handle DCAA audits best aren’t the ones who prepare hardest when DCAA calls. They’re the ones who never stopped auditing themselves. I’ve seen it play out in both directions. A contractor with a functioning internal audit program walks into a DCAA business system review with organized workpapers, documented findings, and a corrective…
A proposal isn’t just a sales document. In federal contracting, it’s a legal representation of your costs — and DCAA treats it that way. I’ve watched contractors win contracts and then spend the next twelve months trying to reconcile what they bid against what they’re actually spending. Sometimes the gap is explainable. Sometimes it’s not….
Most contractors understand that the government pays them. Fewer understand that how the government pays them determines how DCAA audits them — and those are very different things. I’ve seen small contractors walk into a contract financing arrangement without fully understanding which payment mechanism they agreed to. By the time they realize the difference, they’re…
The single most expensive position a government contractor can leave unfilled isn’t a billable engineer. It’s a compliance officer. I’ve audited firms where the CFO was also the contracts manager, the timekeeping administrator, and the de facto compliance function — all at once. That arrangement works fine until DCAA shows up. Then it falls apart…
If your material accounting system can’t pass scrutiny, neither can your contract. I’ve sat across the table from contractors who genuinely believed their inventory tracking was adequate — right up until the moment a DCAA auditor flagged a $400,000 cost disallowance for unsupported material charges. The system wasn’t fraudulent. It was just incomplete. And in…
Your company submitted a proper invoice on June 15 for completed contract deliverables, but the government didn’t process payment until September 3—79 days later—triggering automatic interest penalties of $8,400 under the Prompt Payment Act that the government paid you without dispute. Six months later during your incurred cost audit, DCAA questioned whether you properly accounted…
