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Internet Companies and Government Contracts: Complying with DCAA Regulations

Mark Maric

One of the biggest opportunities for Internet companies of all sizes can be to get a U.S. government contracts. This kind of business partnership is highly desirable as the U.S. government spends about $500 billion for contracts annually.

The government contracting in an extremely competitive field, as the huge number of businesses bid for the same contracts. After all, there is a lot of money involved here and those are all big jobs that can prove vital for any company.

However, for a company to be able to apply for one of the government contracts, it first must meet the necessary regulations which are required.

One of these regulations is the Defense Contract Audit Agency (DCAA) compliance.

For DCAA Pre-Award Requirements to be met, you should make sure your company complies with the following:

1. Direct and indirect costs must be isolated so that direct costs apply only to those services or goods needed to fulfill the contract, while indirect apply to those which are needed to manage the business as a whole.

2. All books of account must be consistent with the general ledger system.

3. Employee timekeeping system or software must be used for separating different activities as a proof of no fraud or wasted time concerning the employee working hours.

4. There should be monthly (or more frequent) reports concerning cost set up and regularly updated.

5. Companies should separate current costs from pre-production or pre-development costs.

The DCAA auditors look for these requirements to be met by the contractor:

  • Business systems
  • Management policies and procedures
  • Accuracy and reasonableness of contractors' forward-pricing and incurred-cost representations
  • Adequacy and reliability of records and accounting systems
  • Contractor compliance with contractual provisions having accounting or financial significance

Where to find opportunities for government contracts?

Here are some websites on which you can get information about all U.S. government contract demands:

How can an Internet-based business get government contracts?

By following these steps companies can increase their chances of landing a federal contract:

1. Deliver innovation, fresh thinking, and relevant solutions. The government is not known for its innovation and flexibility and these areas are a good exploit for Internet companies to prove useful.

2. Don't shy away from a potential government contract and think that is unlikely that your product or services will be acquired. The government will buy almost anything, especially if your solution proves to be more agile, efficient, and responsive in delivery than the one from a larger and more rigid company.

3. Create relationships. Some agencies offer lobbying services that can help you get contracts. Another good way is collaborating with other competing companies and try to make partnerships that will increase the chances of getting contracted.

4. Research and learn about previous Internet-based companies that had successfully obtained government contracts and see what are the things that also might help you.

By Mark Maric, Search Engine Optimization Director
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