Raffa Resources
Raffa Resources
Raffa Resources

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How Raffa and Microsoft Dynamics SL Supports Government Contract

​As government contractors strive to integrate data and simplify processes, they need flexibility, visibility and scalability.  In fact, the need for integration with other systems has never been more important.  It’s critical to have a fully integrated system like Microsoft Dynamics SL for project time reporting and resource scheduling.  Trying to integrate data from disparate systems can create reconciling differences.

Our customers have found that the Dynamics SL solution is a fully FAR, CAS and DCAA compliant system.  This solution excels because of its reporting.  

So, what are the words most of us hate to hear? “GOVERNMENT AUDIT.”

Besides turning the workweek upside-down, the feeling of "what in the world is the auditor going to come up with this time" causes many stomachs to churn. Most middle and larger sized contracting firms experience multiple government audits. Firms often have "favorite" auditors and perhaps even an "auditor from hell."

With Dynamics SL, staff can easily prepare reports in support of an audit.  If auditors show up for a surprise floor check, you have the information readily in hand and in the required format to show precisely where the numbers come from.

Will any ERP system support Government Contractors?  Yes and no…

There is no “silver bullet.”   There is no solution certified by any agency or organization that will guarantee compliance with DCAA, FAR and regulatory audits.   Contractors must invest in the proper processes and reporting tools to help achieve and maintain compliance, which are available in Dynamics SL.  

In addition, you need a partner who understands the government contracting labyrinth of regulations, rules and requirements.

The Federal Acquisition Regulations (FARs) are the rules published by the U.S. government.  The intent of the FARs is to have both the government agencies and government contractors treated fairly. Over the years, the creative geniuses at some of the larger contactors have exploited loopholes in the code.  In turn, the government has sought to plug the loopholes.

The results are that all contractors have an extremely complex government contracting "rule book" to follow. The same complex government contracting rules for multi-billion dollar companies are also used for contractors that have just a few employees. Adding to this complexity, various government agencies layer their specific rules and interpretations of the FARs on top of the published FARs regulations. That’s right, it is not uncommon to have an expense be an allowable overhead cost by one government agency and disallowed by another. This was certainly not the intent of the drafters of the FARs.

As we said before, there is no “silver bullet.”  You must invest in the proper processes and reporting tools to help achieve and maintain compliance.

For all of the these reasons, government contractors are increasingly turning away from basic accounting software applications, and instead seek broader and more fully integrated Enterprise Resource Planning (ERP), such as Microsoft Dynamics SL.

Do you have a strong grasp on the cost principles in FAR Part 31 (Contract Cost Principles and Procedures)?  If not, you need a resource with experience and expertise dealing with Government Contracting (GC).  Raffa has implemented systems at GC’s for over ten years.  One of the biggest challenges of government contractors is a strong grasp of the cost principles specified in FAR Part 31.  If you have a good understanding of these principles, you can design any accounting system to be DCAA compliant.  However, without the labor components that Dynamics has built in, the task to meet DCAA’s requirements can be labor intensive, costly and prone to error. More importantly, time sensitive information is not readily available to key management.

Don’t wait too long – your company needs to operate on the assumption that it will face a rigorous government audit, possibly with little or no advance warning. You should be ready and confident that you will obtain a positive evaluation. Once a company is tagged with having a noncompliant accounting system, it is very time-consuming and difficult to regain the government’s acceptance. Indeed, contracts can be terminated, new business opportunities squandered and even payments on existing contracts withheld until improvements are made.

Dynamics SL is a fully integrated system and provides proper processes and flexible tools to trace documents through the system from award to billing.  Traceability is key.  What used to be a manual process of tracing a transaction and its supporting documents is now a drill-down task in Dynamics.

Flexibility in reporting against the captured base data allows the auditor to drill down to track all of the costs. Set up properly, it allows the auditor to quickly see and test that the cost segregation and classification is proper whether they are testing the general ledger, an incurred cost submission, or the basis for a forward pricing schedule.

So what makes a government contractor different than other organizations?  Government contractors are unique. They have a more complicated "time and billing" systems than virtually any other professional service organization. Why? There are so many different contracting methods.  Payment for services may be based on a number of factors including percentage of completion, time and materials with negotiated rate scales, negotiated lump sum, or even cost-plus.

Add FAR to the mix…and the timekeeping and accounting process cannot help but be complex!

Contractors tend to evolve, and their job cost and accounting needs must also evolve.  Many contractors start out as a one to three person operation, run by former employees of larger firms. They took the "entrepreneurial leap.”  Typically, the owner/managers have taken a few clients with them as the basis for their new business. Using a software spreadsheet application, such as Microsoft Excel®, they work to effectively track their projects and gather job cost information.  

At this level, you are flying under the radar and the level of details and sophistication is more easily managed without dedicated systems.

When firms grow to 10 to 20 employees, the spreadsheet tracking of jobs tends to reach the complexity where the "wheels start to come off.” Instead of having five jobs in process, there are twenty.  There are also more contractual requirements for payment.  Everything becomes more complex.  At this stage, companies begin to look for a more integrated solution.  Instead of entering information into multiple disparate systems, owners are looking for a more sophisticated, integrated solution. Before, owner/managers were once able to know the status of each project and the workload by a daily 10-minute walk around the office, now it becomes nearly impossible to keep up with the status of all of jobs-in-process.  Owner/managers also start seeing the benefits of generating client billings directly from job cost information.  They also want a means of knowing where their company is financially, "Are we making or losing money?” 

The next growth challenge for firms tends to occur when the firm reaches 30 to 50 employees. Owner/managers find that they need more formalized systems to maintain order and operate their firms. They are finding that they are spending more and more of their time dealing with exceptions, both client-related and administrative.  A 30 to 50 person firm is the size where most contractors realize that the time to "get organized” is now!

The solution for many contractors is software designed for professional services and contracting firms.  Dynamics SL is the only system written in a current code base (VB, .Net), supported by the largest and most innovative software firm for businesses, Microsoft, and flexible enough to support both government and commercial contracting.

With Dynamics SL, you don’t have to give up working in Excel.  The integration tools built into Dynamics SL allow data to be imported to and from Excel to support a wide variety of business analysis situations.  The difference?  With Dynamics SL, the data is secure and Excel becomes a supporting tool, not THE tool.

To learn more about how Raffa and Microsoft Dynamics SL can help your organization overcome the complexities of accounting and government contract reporting, please contact a member of Raffa’s Technology Practice at 202-822-5000.