Challenges Contractors Face

Bidding the Rates

Often when you look at small business contractor's cost records, you will notice a wide spread in profitability between various projects and contracts. When you look closely, one or two projects are responsible for the company's profits, and the other work is losing money or break even at best. The company is profitable but too much of the work is not.

The difference, with few exceptions, are the rates.

Competitive pricing is a strong driver in the rates contractors bid, but contractors cannot help but benefit from understanding their actual rates and costs.-- Knowledge their competitors may have and use against them.

Ask yourself a couple of questions:

  • How long does it take to figure out my indirect rates? Longer than ten minutes?
  • Do my rates consider how much our health insurance costs are going up? Is the company match on the 401(k) maxed out?
  • Just what is the difference between Overhead and G&A? Does the way we are calculating our rates make sense?
  • Questions?

    Would you like someone to take a look? Steve's second book, Surviving a DCAA Audit includes a clear discussion of these issues and how to integrate answers into your work. But of course, feel free to contact us.

    Voucher Approval -- Getting Paid

    In fiscal year 2015, DCAA expanded it review and audit of contractor vouchers to include a new program dedicated to auditing at least one small contractor voucher a year. The new audit program is ten (10) pages long.

    Early indications are that DCAA is following through on the frequency of these audits and contractors can now look forward to at least one voucher audit a year in addition to the current review of pending (unpaid) vouchers, floor checks, accounting system audits, and incurred cost proposal audits.

    The Audit program includes a review of the contractor's internal controls which means Policies and Procedures along with the Accounting System. This is in addition to the requirement to support the current charges.

    In a bit of a Catch-22, since DCAA is under a time restraint to approve or reject unpaid vouchers, they pass this burden onto to contractors by requesting a near instant response. If DCAA has to reject the invoice because the contractor could not respond quick enough, this rejection becomes a factor in determining how often DCAA does the second procedure on paid invoices.

    Steve first book, Accounting Policies and Procedures for Small Government Contractors Working with the DCAA and Other Government Agencies contains extensive discussion on on implementing accurate and responsive billing systems with model polices and procedures.