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Subcontractors need to be DCAA compliant too

 Recently, I spoke with a small contractor with 12 employees that had no direct contracts with the federal government. All their work to date has been performed as a subcontractor, but one of their primes has mandated that they get a DCAA compliant system in place. This will likely necessitate moving off of QuickBooks.

It is a myth that subcontractors don't need to have compliant cost accounting software because their  prime contractors are responsible for ensuring the adequacy of their subcontractor's accounting systems.  Prime contractors are courted  daily by smaller companies wanting to subcontract as part of their team. If your company isn't compliant, then the  prime can find another subcontractor that is, and they will. The best way to avoid a lost opportunity  is to put a compliant system in place before your prime forces the issue or takes their business elsewhere. If you are proactive and take the steps to get compliant and you market this capability to your potential prime contractors, you will be in a position to pick up work when other subcontractors fail to maintain an adequate (by DCAA standards) accounting system.

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