SBIR Awards and DCAA Compliant Accounting Systems

ReliAscent (and our predecessors) have been in the business of helping SBIR firms install and operate compliant accounting systems for over 22 years.  As most SBIR firms are aware, a Phase I award is usually a fixed price type award and since the dollar volume is relatively low, a compliant accounting system is not required during the phase I award.  For the past 22 years we have encouraged Phase I winners to begin developing their accounting system in anticipation of a Phase II award that would require a compliant accounting system.   There is not a government requirement to do this and thus many companies understandably chose to ignore the compliant accounting system requirement until they got to that "bridge to cross".     

Recently we have seen more emphasis put on the accounting system to Phase I awardees.  This is a note found in a recent Phase I SBIR award document:    

Phase I contractors are cautioned that if they intend to submit a proposal for Phase II work on a cost reimbursement basis, they must begin implementing a Government-approved accounting system if they do not already have an approved accounting system.  It is a federal regulatory requirement that a cost reimbursement contract cannot be awarded without some form of an approved accounting system.  Early coordination with a DCAA representative or other outside accounting professional should alleviate that problem.  In order to understand cost reimbursement contract principles, Phase I contractors are advised to review the Limitation of Cost and Limitation of Funds clauses contained at FAR (52.232-20/22- APR 84).  Only if it is objectively certain that definite design, development or performance requirements can be achieved, and are specific enough to allow for Government price analysis and quality assurance, would a fixed price contract be appropriate for a Phase II proposal.

As you can plainly see, there is still not a requirement but evidently the government is trying harder to insure success of the Phase I winners.  ReliAscent has helped clients in the past by installing a building block approach to a compliant accounting system.  In other words, we install the foundation for a compliant system during Phase I but all of the elements of a fully compliant system may not be required (or affordable) during the initial phase.   Once it becomes clear that the client will win a Phase II award it is relatively simple to add the features to make the system fully compliant with FAR requirements.  Call today to find out how this works. 


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