Winning cost plus awards can be a time to celebrate… or to groan˳ With the right cost accounting system and appropriate processes in place it is a time to revel in your new-found business growth˳ It is important to have the right system in place, but also what it takes to make it through the audit and sail through your future bids and ongoing revenue stream˳
The right cost accounting system is a necessity when you are going after cost plus contracts˳ That is, if you expect to win them and get revenue from them˳ When you have the right system along with the attendant accounting policies and practices, you have a path to more cost plus awards˳ While the right cost accounting system does not guarantee you awards, it paves the way to making those awards easier to obtain… and keep˳ Let’s explore three components of what is involved˳
1˳ Consistency
All Government contractors, whether or not they are subject to Cost Accounting Standards (CAS), must be compliant with CAS 401 and 402˳ This issue is typically lost on most small contractors˳ Most believe that because they are not subject to CAS they do not have to comply with CAS 401 and 402˳ Both standards require contractors to be consistent in estimating, accumulating and reporting costs as well as in allocating costs incurred for the same purpose˳ What is important here is that your estimating system, including practices, be disciplined by your consistently-applied cost accounting methods˳ What you do in practice to adhere to your cost accounting system methods will apply to what you do in estimating your new projects˳ This solid practice will decrease your chances for defective pricing˳ Be consistent in your pricing and cost accumulation methods˳
2˳ Credibility
To be a credible Government contractor, you not only need the right accounting system but the “other” parts that make you a complete package, have an acceptable compliant system, and allow you to move more freely in the cost plus environment˳ Most contractors think it is just about the system itself˳ The system is not complete without adequate accounting policies, procedures/practices and people – an employee benefits manual will not do˳ Real credible contractors have written accounting policies and procedures˳ Your best pricing estimates should be supported by data from your managed cost accounting database˳ When you support your estimates with real live historical data, you are credible˳ You must include profitable bid considerations in designing your bid rates – otherwise why stay in business˳ DCAA emphasizes solid business systems which are supportable by good historical data and estimating that uses that data˳ You must have reliable source integrity to support the credibility of your estimates˳
3˳ Conflict
When you have the right accounting system, along with appropriate accounting policies, procedures/practices and people, you greatly improve your chances for your outside auditor (be it DCAA or otherwise) to agree with almost all, if not all, of what you are doing˳ Once the auditor buys in to your adequate system, your audits will proceed much more smoothly and effortlessly˳ Your system will produce the results they are looking for and they already know that your policies and practices are up to par˳ This means that the amount of time the auditor spends with you is greatly reduced˳ That spells more productive time for you and your staff – not answering questions that are easily solved˳ Your staff’s interaction time with auditors to comply with their requests is tremendously diminished˳ Your accepted policies and practices already lay out the road map that shows your consistency˳
These three elements are only the beginning of making it possible to win cost plus awards with the right accounting system˳ While there are several other factors, these three comprise a solid backbone of practices you will call on to support your bids˳ When you combine these factors with a well-designed accounting system, you are on the road to being able to win more awards˳
Source by https://ezinearticles˳com/?Win-Cost-Plus-Awards-With-the-Right-Cost-Accounting-System&id=9834979
