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What You Should Know About DCAA Compliance

Being awarded a government contract can be a lucrative opportunity for your business in the Aerospace and Defense industry. In order to win those contracts, in addition to meeting the standards of AS9100 compliance, ISO 9000/01 compliance, and any other regulation, you will need to be compliant with DCAA standards. Cre8tive Technology and Design is ITAR registered and will assist you with your compliance needs.

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How Cre8tive Can Help

If you are wondering: “What is DCAA compliance?” and “What DCAA guidelines must be followed?” the professional governmental compliance experts at Cre8tive are here to help. In this blog, our first in a series on DCAA compliance, we have provided guidance regarding what the DCAA is and how contractors within the aerospace and defense industry can successfully meet compliance requirements. Aerospace and defense companies that partner with Cre8tive exceed standards set forth by the U.S. Department of Defense (DoD) with our DCAA solutions.

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What is the DCAA?

DCAA is an acronym for the “Defense Contract Audit Agency”. This agency provides audit services for the DoD and other federal agencies. They act as overseers to ensure governmental and military contracts are kept on budget in the accounting process, in order to not waste tax dollars.

The DCAA initiates audit services on contracts with a significant influence on contract pricing, services and overall negotiations with prospective contractors. While the agency does not determine contract awards, their recommendations to government contract awarders are used by those officials who complete the negotiations for thousands of aerospace and defense contracts.   

What is the Difference Between DCAA and DCMA?

While the DCAA is responsible for auditing and providing additional monitoring of contractor accounting, the Defense Contract Management Agency (DCMA) also has a broad range of responsibilities, such as overseeing operations for contractors on behalf of the DoD and other organizations. They manage product delivery and supply and service acquisition on the government’s behalf.

For the purposes of this blog, we will focus on the DCAA. Find out more on our website about the DCMA with our resource comparing and contrasting the two agencies.

What Comes Before a DCAA Audit?

DCAA compliance generally consists of an audit and accommodating the varying degrees of recommendations from the agency in order to comply with federal rules and regulations.

Before you can prepare for a full DCAA audit, your A&D business must pass pre-award surveys. These surveys are not nearly as in-depth as full audits, but they will check to see if your company has the following:

  • Enough financial capital and the means to take on a government contract.
  • A robust accounting system that will be able to keep track of different itemized costs associated with a government contract.

An ERP system with procedures that your employees buy into will set you up for success when bidding for a government contract from the U.S. military. Cre8tive Technology and Design provides professional integration of Epicor Kinetic, a powerful ERP that can be custom configured for aerospace and defense companies to achieve compliance progression, and we are the preferred partner for A&D ERP implementation.

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What is a DCAA Audit?

The DCAA audit process is complex with various types of audit categories. Cre8tive has a dedicated resource available to address the process, from forward pricing to incurred cost, and other audits.

What Costs Need to be Organized for DCAA Compliance?

Because a DCAA audit is essentially a robust check on everything financial within your company, the more specific your accounting is, the better. Broadly, DCAA auditors are looking for different types of costs, like direct costs, allowable costs, unallowable costs, and cost pools. If you employ hourly employees, it is crucial that exact hours and wages are documented. You can see the full list of costs on the government’s Federal Acquisition Regulation website.

How Can an ERP System Help with DCAA Audits?

Just the nature of having an ERP system will not automatically guarantee DCAA compliance, but it will go a long way in helping you achieve it. Utilizing an ERP system will help keep your business organized and optimized. At Cre8tive Technology & Design, our team of experts can design and implement ERP solutions like those from Epicor Kinetic that will help you achieve DCAA compliance and, in turn, bid for, win, and complete government contracts.

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Have unique aerospace and defense DCAA compliance needs? Get in touch with us, and one of our knowledgeable representatives will help you get started with a custom compliance plan.

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