DCAA Guidance

I'm preparing my first DoD SBIR Phase II proposal. Word I get is that the big hangup in getting Cost Plus Fixed Fee (CPFF) contracts approved is getting the DCAA (Defense Contract Audit Agency) to sign off on the firm's accounting methods. My original contract stipulates:

Phase I contractors are cautioned that if they intend to submit a proposal for Phase II work on a cost reimbursement basis, they must begin implementing a Government-approved accounting system if they do not already have an approved accounting system.

Ah, yes... but just what constitutes a "Government-approved accounting system"? I engaged a local accounting firm when I first received word that my Phase I had been selected. The guidance I got was essentially common sense: document everything; keep receipts. I added my own caveat: be honest. Other than that, I was pretty much on my own.

As luck would have it, I didn't start my business in an area with a critical mass of government contractors to produce an ample supply of CPAs with sufficient knowledge of these arcana. Last week, I had another consultation, this time with one of the firm's partners, to prepare for my Phase II cost proposal. He was duly impressed with the level of detail I put into my spreadsheet. He offered a few suggestions and corrections (SS + Medicare = 7.65% not 7.5%), but for the most part, I'm still wondering if I'm doing things right.

Today, in polishing off the final touches on a new DoD Phase I proposal, I came across the following line in the proposal guidelines:

For more information about cost proposals and accounting standards, see the DCAA publication called “Information for Contractors” available at http://www.dcaa.mil/.

And, what do you know? On the DCAA website is a concise guide "to assist contractors in understanding applicable requirements and to help ease the contract audit process". At 136 pages, the foreword still calls it a pamphlet. Regardless: if it were 800 pages I'd be delighted with the find. At $150/hour for a CPA, I can do a some more of the homework myself.