When becoming a government contractor there are many new things to think about, including the DCAA pre award survey. You are introduced to what feels like over 1,000 acronyms, audit after audit, and project management requirements. If you are a prospective government contractor with an award looming that has cost type work, your first encounter with DCAA will most likely be the Pre-Award Survey (SF1408). In this blog, we will provide an overview of the SF1408 survey and audit. Before that, however, let’s do a quick review of DCAA Manual No 7641.90: Information for Contractors, which is a great resource for new and prospective contractors.
DCAA Manual No 7641.90: Information for Contractors
Believe it or not, the DCAA doesn’t just loom over contractors with audits; they provide a lot of helpful resources for contractors to understand the various audits they may undergo and how to prepare! DCAA Manual No. 7641.90 provides an introduction to the DCAA and explains several audits including price proposals, incurred cost proposals, Pre-Award Survey, and more. This document is a must-read for anyone new to government contracting. Enclosure 2 of the document focuses on the Pre-Award Survey.
If you are just getting started in the government contracting world, use this link below to access the DCAA Information for Contractors.
The DCAA Pre Award Survey and Audit Overview
The pre award survey is not an audit. It is an evaluation typically made by your contract administration office, of your ability to perform a proposed contract. DCAA may be requested to provide information regarding the adequacy of your accounting system to accumulate the type of cost information required by the contract. Before the contracting officer (CO) requests a DCAA audit of your accounting system, the CO will ask you to complete the “Pre-award Survey of Prospective Accounting System Checklist.” You can find that checklist by going to the dcaa.mil website, specifically the link below. The checklist provides documentation to the auditor on how your accounting system meets the criteria in the SF 1408. The CO will give the checklist to DCAA when they request an audit of your accounting system.
To download the checklist, visit:
The SF1408 or pre-award accounting system survey is an examination before contract award to determine the acceptability of your accounting system for accumulating costs for your prospective government contract. The audit scope is limited to obtaining an understanding of the design of the prospective accounting system so as to appropriately complete the SF1408 “Pre-award Survey of Prospective Contractor Accounting System,” and procedures essential to reach an informed opinion as to whether or not the design of the prospective accounting system is acceptable for accumulating costs and can generate the specific cost information that is required to execute a government contract.
Organizations that are looking to get their first government contract may not want or need to install a new, more detailed accounting system unless awarded a contract. In this case, if the potential government contractor anticipates a contract award, it must have developed and designed a system that is operable, though not necessarily in use. You need to be in position to demonstrate the new system to the auditor and ready to implement the system prior to incurring any costs on the government contract.
Sometimes the auditor may not think the system is acceptable. You and your CO will receive notification and typically will give you suggestions on needed corrections. Once you have incorporated the corrective actions, a follow up audit will be completed and hopefully the CO and DCAA will be satisfied.
Once you have won the contract, you may be subject to an accounting system audit. The basic objective of this audit is to assure your accounting system is adequate for accumulating cost and passing those costs on through invoices presented to the government. This audit is requested by the CO when there is follow-up recommended from the pre-award survey or if no pre-award survey was done.
Is There Such a Thing as DCAA Approved Software?
Just to be clear, there is no such thing as DCAA Compliant Software! It is your organization and procedures that will be assessed for compliance.
That said, software such as Unanet, that is purpose-built for government contractors can significantly help you with achieving compliance. DCAA compliance requires that your accounting and related business processes which collectively including policies, manual procedures and tools be compliant. Software alone is not audited for DCAA compliance or certified, nor approved as DCAA compliant. However, Unanet software has been reviewed by DCAA auditors at more than one thousand customer sites and, along with the customer policies and procedures, approved as supporting DCAA requirements.
What the DCAA is Looking for in the SF1408
- Segregation of direct and indirect costs
- Identification and accumulation of direct costs by contract
- Consistent allocation method for indirect costs to intermediate and final cost objectives
- Accumulation of cost under general ledger control
- A time keeping system that identifies employees’ labor by intermediate or final cost objectives
- A labor distribution system that charges direct and indirect labor to the final cost objectives
- Interim determination of costs charged to a contract through routine posting of books of account
- Exclusion from costs charged to the government contracts of amounts that are not allowable
- Identification of costs by contract line item and units
- Segregation of preproduction costs from production costs
For the system to get an acceptable, all items above must be checked Yes or Not Applicable. Utilizing Unanet, you can be confident that you will meet the standards in FAR 53.209-I(f).
Unanet Success Story
With Unanet, Array successfully completed a DCAA audit that stated that their accounting system design complies in all material respects with the criteria contained in FAR 53.209-l(f), Standard Form 1408 (SF1408).
Why Unanet for Government Compliance?
Unanet is purpose-built with the project or contract in mind. It is uniquely designed for government contractors and has been battle-tested for compliance rules and regulations. Our compliance features are built into the tool, making compliance part of the fabric of your business. Unanet currently has over 1,000 clients using and trusting the system. Unanet supports compliant accumulation and allocation of costs utilizing time keeping, expense accounting, cost pools, indirect rates, revenue recognition, and project management all in one truly integrated system.
Whether you are a small new or a seasoned larger GovCon, you can count on Unanet for your compliance needs. Unanet is recognized by the audit agencies as being “compliant ready,” giving you an immediate advantage in the audit process.
Make sure you’re prepared for a pre-award survey and an accounting audit. Learn more about SF1408 in our white paper, “Valuable Information for Government Contractors – SF1408 and Timekeeping,” or register for a demo to see how Unanet helps smooth the path to compliance.
Still want more? Check out the related content below and read our SF1408 Part 2 blog!