When your company is awarded a government contract there will be feelings of joy, contentment, and of course excitement and anticipation. If this is your first contract, odds are that your company is already hard at work making business plans, organizing project teams and refining budgets. While these tasks are necessary and interesting, the newly-minted contractor should also look to tidy up their housekeeping. Specifically, you need to make sure that you are ready for a DCAA audit.

While not every business that is awarded a contract will be audited by the DCAA, preparation for the audit should be taken seriously. Failure to pass an audit can result in costly setbacks, and in extreme cases, indefinite contract postponement or reassignment. The guidelines for the DCAA audit are well documented, and a detailed explanation of the background and process of the audit can be found here. Your first step should be looking at a way to track time for employees and any contracted labor you will be using.

It is possible to maintain compliance with regard to time tracking using manual solutions or internally developed software, however this can be both time consuming and inaccurate. Ultimately, the money you saved by developing a homebrew solution will be lost through the costs associated with managing a damaged or imprecise system.

Instituting an automated system for DCAA compliance will make the process much easier and will increase the accuracy of your records. Further, having a comprehensive system that tracks time of employees, contractors, and anyone else directly involved with your business will prove extremely useful should you ever need to draw upon past data for use in a current contract or when demonstrating previous success when trying to win a new one. Having DCAA compliant software can further act as a differentiator when defense organizations award contracts, as those with a DCAA compliant system in place represent less of a risk.

Prepare yourselves for the DCAA audit and you will find that the task is not as arduous as it may at first appear. Remember, though the DCAA does complicate things for businesses, it ultimately saves money by reducing tax dollars spent on frivolous things such as diamond-encrusted toilet seats or saffron-spiced ramen noodles. In the end, it comes down to this: if you want to play with The Man, you’ve got to play by his rules.

Have you had any experience with DCAA compliance? How have you prepared for an audit?