There is a common misconception about fixed-price government contract awards which is a contractor that exclusively performs fixed price work with the Feds can avoid DCAA audits and therefore can minimize the need to invest in an acceptable project cost accounting system.
I was speaking with an associate of mine recently and was told about a government contractor client of hers that is performing as a Prime on a Fixed-Price, Level of Effort contract with deliverables. Their government customer is requesting a listing of labor hours incurred for each deliverable both from the Prime and the Subs working on this contract as supporting backup for the fixed-price invoices that are rendered on a schedule based on negotiated milestones. It is thereby similar in hourly reporting requirements to a Labor Hour or Time and Materials contract except that hourly billing rates and ODCs aren't required on the fixed sum invoices that are rendered. Therefore, at the very least, the prime and its subs will need an acceptable timekeeping system "...that identifies employees’ labor by intermediate or final cost objectives." In other words, all involved must provide total hours worked on each task order. FAR 16.207 stipulates that a "firm-fixed-price, level-of-effort term contract requires the contractor to provide a specified level of effort, over a stated period of time..." This is not new to us, we often see the Federal Government want the best of both worlds with keeping costs fixed while requiring supporting data that is similar to flexibly-priced contracts. The SF1408 Preaward Survey, Evaluation Checklist includes the criterion "ACCOUNTING SYSTEM PROVIDES FINANCIAL INFORMATION: Required to support requests for progress payments". This applies to most contract types defined in FAR Part 16 - Types of Contracts, including many of the Fixed Price variety.
While it may generally be true that most fixed-price contracts by themselves do not require DCAA incurred cost audits, you still must justify your cost structure in a pre-award audit with certain fixed-price contract types. When your contract is a fixed price incentive contract, for instance, FAR 16.4 stipulates, "This contract type may be used only when—(1) The contractor’s accounting system is adequate for providing data to support negotiation of final cost and incentive price revision; and (2) Adequate cost or pricing information for establishing reasonable firm targets is available at the time of initial contract negotiation." This directly ties into the SF1408 criterion "IS THE ACCOUNTING SYSTEM DESIGNED, AND ARE THE RECORDS MAINTAINED IN SUCH A MANNER THAT ADEQUATE, RELIABLE DATA ARE DEVELOPED FOR USE IN PRICING FOLLOW-ON ACQUISTIONS?"
While some contract types (e.g., Firm Fixed Price) and certain awards that are beneath a predetermined dollar threshold may not require supporting cost data post facto, several fixed-price contract types do indeed require an adequate accounting system. Besides, don't you think it would be a good idea to have an accurate picture of your cost structure and historical cost data when bidding on any type of contract, be it fixed price or otherwise?
