Is Your Company Prepared to Get a Bigger Slice of The DoD Pie In 2011?

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Depending upon whether your fiscal year mirrors the government's or you use the calendar fiscal year, your company is either approaching the end or near the beginning of its fiscal year. Either way, this is the perfect time to evaluate your accounting and marketing strategies, analyze what worked and what didn't last year, and position yourself to win and fulfill more government contracts next year.

Why is this critical? The federal government is the largest purchaser of goods and services in the world, regardless of the economy, and the Department of Defense (DoD) does more purchasing than the other agencies. The contracts for those purchases are overseen by the Defense Contract Audit Agency (DCAA). Especially in times of economic weakness, the competition for those dollars is fierce. The good news is, with your accounting and marketing houses in order, your company can compete with larger and better known competitors for your piece of the pie. But without marketing strategies designed to win more government business, as well as the accounting system to track and fulfill that business, your ability to compete and win in the government arena evaporates.

Is your accounting system an asset or a liability?

Software: out of the box doesn't mean out of luck.

  • Although specialized software written to satisfy DCAA requirements exists (and is expensive), Peachtree, Quickbooks and other general accounting software can be modified to meet the requirements imposed in a federal government contract. But to satisfy those requirements, pass a DCAA audit and not have payments delayed due to your mistakes, your accounting system must accumulate, allocate and report activities, materials and time in specific ways. This will vary depending upon the type of contract " fixed price, cost reimbursement or time and materials " so this is the time to evaluate your existing software and ensure your system is in compliance. An experienced, skilled consultant can help.

Audit Insurance: prepare with a mock audit

  • Chances are excellent your company will be audited by the DCAA, and that audit may even be scheduled before work begins on a contract. Unlike in previous years, when DCAA auditors would suggest improvements and fixes, the DCAA now works on a pass-fail system. Will you pass? An outside consultant can conduct a mock audit and help you review and correct:
    • Chart of accounts structure and its compliance to DCAA requirements
    • Labor cost tracking overview of timekeeping system and management
    • Job cost reporting for government reporting requirements
    • The balance sheet for compliance to general accounting standards
    • The profit and loss for segregation of direct and indirect costs
    • Your accounting policies and procedures, and how they're documented in your financial document process map

The D-I-Y dilemma: are your internal resources up to the task?

  • It may make financial and operational sense to outsource your DCAA accounting to ensure it remains DCAA compliant. If your in-house accounting staff lacks the time, knowledge or expertise to manage an accounting system that will satisfy DCAA contract requirements, an outside service can provide:
    • Labor cost tracking and overview of timekeeping system and management, satisfying DCAA timekeeping requirements.
    • Comprehensive job cost reporting, satisfying government reporting requirements.
    • Indirect Cost Rate calculations and allocations with support for multiple cost centers.
    • Project billings for all government contracts, cash flow planning, and management.
    • Analysis of operations and financial reporting.
    • Structuring of chart of accounts to meet the Federal Acquisition regulations.
    • Reconstruction of records and financial information.
    • Comprehensive financial snapshots

The final hurdle: the Incurred Cost Proposal Submission (ICS)

  • Generally, if you have a prime contract with the FAR Allowable Cost and Payment Clause 52.216-7 or you are a subcontractor with flow-down provisions from the prime, you will need to complete an ICS. An ICS is a way to submit your indirect rates for audit each fiscal year, which is done electronically by completing the ICE (Incurred Cost Electronically) for DCAA. In it you will provide contract detail tied to your income statement with indirect rate calculations.In most cases your ICS, along with supporting data, is due within six months of the end of your fiscal year, regardless of the contract timeframe.

B2G marketing: strategic tips

You know what you did to market to the government last year. Did it lead to as many contracts and as much business as you'd like? Did your marketing successfully position you against your competitors? If you'd like more business from the biggest purchasing agent in the world, here are five critical strategies:

First impressions: the capabilities statement

  • Your capabilities statement acts as a resume for government contracts. Essential elements: past performance on government contracts, certifications and awards, capabilities, testimonials from government clients. This is the document you'll hand out to contracting officers and other potential government clients more often than any other. Both the content and the design have to impress the recipient and make him/her want to learn more about your company.

Your website: your hardest working salesperson

  • Your website never calls in sick, never takes a day off, and is the first place potential clients go to research your company. If you cut corners to save money when building your website, don't have the information contracting officers want to see, or aren't updating it regularly, your website isn't bringing in the revenue it should. Does your website spell out your government-related capabilities, accomplishments and certifications? Does it list your NAICS (North American Industry Classification System) and SIC (Standard Industrial Certification) codes? Your GSA schedule or other certification information? Is there a separate section specifically written for government clients?

Collateral: the impression you leave behind

  • Every printed piece your company uses, from business cards to brochures, drives your image. If your business card, brochure, sales sheets or other materials were sitting on a contracting officer's desk next to those of your competitors, would that officer pick yours up first? Would those materials highlight your government-related accomplishments and expertise? A government contracting officer won't read your existing marketing materials and infer what you can do for his/her agency. You need to spell it out. Include case studies and other information about the things you've done for government clients. Solicit testimonials from the contracting officer(s) with whom you've worked, and make sure those testimonials are included in your packet when bidding on new government contracts.

Relationships: who you know and who you'd like to know

  • The government doesn't buy your services. People buy your services. You need to be in front of the people who will buy from you all of the time. Research what agencies and contracting officers plan to buy the products or services your company offers. Check their forecasts. See which trade shows and other events they attend. Find out what they need and when they need it, be where they are, develop relationships. If the key to real estate is "location, location, location, the key to marketing to the government is relationships, relationships, relationships."

No matter what the economy does, winning and servicing more government contracts can make 2011 a better year for your company than 2010. The good news is this: getting your accounting and marketing houses in order can make you equal or better than your competition in the eyes of federal contracting officers. Whether you go it alone, work with a consultant or outsource some or all of the above strategies, it can be done.