DCAA Approval
The Defense Contract Management Agency (DCMA) helps define business systems requirements and provides direction on audits and approval criteria. Potential government contractors need to understand this agency as they define the approval criteria for awarding contracts. They also have a strong hand in guiding government audits. Speaking with them will help you with the following:
- direct and indirect cost segregation
- cost pools and allocation bases
- timekeeping
- labor distribution systems
- maintaining compliance with invoicing clauses
- avast and ever-changing complex of other issues
Have A Clear Understanding Of The Government’s Accounting Requirements
The Financial Accounting Standards Board (FASB) states that contractors must comply with the following in order to work with the government:
- Federal Acquisition Regulations (FAR)
- Cost Accounting Standards
- FAR agency supplements
Understanding Audits
Your company should be clear on what the DCAA considers the responsibilities of federal contract actors. They include the following:
- timeliness of payments to subcontractors
- documentation of contractor oversight of subcontractors
- documentation of enforcement of flow downs
- documentation of support for subcontractor billings
- documentation of subcontractor reviews
Fixed-Price Contracts
These government contracts are used when the scope of work is clear from the beginning and therefore a price is determined by the agency in advance. There are many different types of this particular contract.
Firm Fixed-Price (FFP)
This contract means that the price is set in stone and the vendor or small business awarded the contract will be taking all the risk. So if the contract is over budget, the small business owner has to pay out of pocket. However, if the project is under budget, then the business will keep the extra profit. This is a great contract for companies that are precise with their pricing and have a lot of experience in the field.
FFP Level-of-Effort
This government contract is defined by the level of effort the service provider will commit to the project, rather than results. It is a common contract used for things like research, which is often hard to define in advance.
FFP Materials Reimbursement
The small business provider will have a predetermined price for service and labor but is reimbursed for the cost of the materials at the end of the project. This contract is often used for repair services where at the beginning, the cost of materials may be unclear.
Fixed-Price with Award Fees
A fixed price with award fees contract offers a hard and fast price for objective performance success. This contract will also have additional awards to incentivize more subjective qualities like aesthetic appearance and technical knowledge
Fixed-Price with Economic Price Adjustment
The prices are often adjusted at the top of the project to account for changes within the cost of labor, materials, or market prices of specific items within the contract. The criteria for these sorts of price changes must be defined within the original contract.
Fixed Price Incentive (FPI)
This contract states a maximum price but it also awards the service provider for coming in under budget. So coming under budget in this type of contract allows for a larger profit for the small business provider.
Cost-Reimbursement Contracts
Cost reimbursement is a category of contracts that are used when it would be too difficult to estimate the cost of the project in advance. They usually define a spending limit but are a much lower risk for the service provider than fixed-price contracts.
Cost Contracts
This contract pays only for expenses and there is no profit for the small business provider. Cost contracts are often used for research projects provided by non-profit organizations.
Cost-Plus-Fixed-Fee
This contract includes a limit for expenses that will be reimbursed along with a fixed payment for the service provider.
Cost-Plus-Incentive
Like Fixed-Price-Incentive contracts, this provides a financial incentive for the service provider to come in under budget, while also covering project expenses.
The Bid
The Federal government has the following type of solicitations for bidding:
- Request for Quotation (RFQ). This type is for contracts below $150,000 with a simplified acquisition procedure.
- Request for Proposal (RFP). This type of solicitation asks vendors to propose in response to the government’s request. You can (and often will) discuss delivery details, technical requirements, and specifications with the contracting officer when you bid on that type of solicitation.
- Invitation for Bid (IFB). The “lowest bid wins” or “sealed bid” type of solicitation. No discussion or price negotiation is implied here.
- Request for Information (RFI). This is mostly to research the market and evaluate the interest and capabilities of contractors in a specific niche.
Make sure you read the solicitation requirements carefully. A solicitation package will include documents, technical conditions, attachments, and various other things required for the submission. For most federal government contracts under RFP and IFB solicitations, there are standard contracting forms you should fill out. As for the required documents, they are listed in the solicitation
Contact your contracting officer if you have questions. You must understand a single thing about the solicitation that you are bidding on. Also, look to FARs (Federal Acquisitions Regulations) that govern the solicitation you are to respond to make sure you know the regulations and requirements.
The First Step Is Registering With SAM
To do any business with the federal government, you must register your business in the System for Award Management directory. The government will not hire any type of business (large or small) that has not registered in the typesSAM directory.
Please read one of the helpful blog articles on our site Everything You Need to Know About SAM for Small Businesses. These blogs will help give you all the information you need to understand how we can help make the process very easy for you. Sam Directory will happily guide you through this often confusing process.
SAM stands for System Award Management.
In order to do any business with the federal government, you must register your business in the System for Award Management. The government will not hire any type of business that has not registered in the SAM directory.