Preparing the Pre-award Survey of Prospective Contractor Accounting System

Government contractors performing work against flexibly-priced contracts or grants must have an adequate accounting system as defined in FAR 53.209-1(f), 2 CFR 200, or other guidance. Most awards will ultimately point to the SF 1408 Preaward Survey of Prospective Contract Accounting System, DFARS 252.242-7006 Accounting System Administration, or similar requirements like the SBIR program.

In particular, FAR 16.3 requires contractors to have an “adequate” accounting system, sometimes referred to as an “approved” accounting system, to be awarded flexibly-priced contracts such as T&M, cost-type, and certain fixed-price contracts based on costs.

The purpose of the SF 1408 is to determine the adequacy of a contractor’s accounting system as follows:

  • Compliance with U.S. GAAP
  • Segregation of direct and indirect costs
  • Job costing by contract and CLIN
  • Proper calculation and allocation of indirect costs
  • Timekeeping and labor distribution
  • Exclusion of unallowable costs

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