Six Business Systems for Government Contractors
The Department of Defense considers contractor business systems and internal controls as the first line of defense against waste, fraud and abuse.
For contracts awarded after May 18, 2011, DFARS 242.70 requires contracting officers to determine that a contractor’s business systems are “adequate.” The six systems include:
1. Accounting and Billing
2. Contractor Purchasing
3. Cost Estimating
4. Contractor Property Management
5. Material Management and Accounting
6. Earned Value Management
DoD considers these business systems requirements as “material terms, performance of which is required to ensure contracts will be performed on time, within cost estimates and with appropriate standards of quality and accountability.”
The rule permits contracting officers to withhold 5 percent of payments for significant deficiencies in any business system (up to 10 percent if more than one system is deficient) until the contractor corrects the deficiency. Passing a business systems review can also be required before awarding a contract.
How We Can Help
Left Brain Professionals knows government contracts. Our government accounting and contract management experts can help you improve business systems, reduce financial risk and increase your success. Services include:
- Advising on ways to correct deficiencies.
- Assisting with DCAA and DCMA audit preparation and defense.
- Reviewing systems for compliance with applicable regulations.
- Training your team to implement adequate systems.
- Left Brain Pro Website:
- From the Answers Blog: Begin Planning Today for DCAA and DCMA Contract Reviews
- Resources: Six Business Systems
Ready to get more information?
Contact us now or schedule one-on-one time to discuss how we can help ensure all your business systems fully comply with DoD requirements.