How to Prepare for Submitting Defensible Bids

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Last month, I spent a considerable amount of time supporting a favorite client in answering “Clarifications and Discussion” coming from the government.  My client and his subcontract team had submitted a proposal earlier in the year and the government was asking them to support their costs. As it turned out, neither the prime nor the subcontractors had developed the support before submitting their cost proposals.  In fairness to the team, the government had not required them to submit supporting cost and pricing data at the time of submission.  So, our response to clarification request entailed a considerable amount of research, time, and stress to complete.  In addition, each member of the team is unsure whether they will make or lose money if the contract is awarded to the team.

To avoid this, contractors should always prepare and submit a defensible bid; whether the government is requiring it for the procurement or not.

Defensible bids must be based on something other than your knowledge and experience of the product and services you want to provide. If you want to beat your competition and posture yourself for success, you need to be prepared to defend your bid.

Here is a list of acceptable support documents that you should have available before you submit your bid:

  1. Direct Labor Costs:
  • Payroll reports for current employee labor rates
  • Contingent hire agreements
  • Labor survey data (Department of Labor, Towers, ERI, others)
  1. Consultant Costs
  • Consultant’s cost proposal
  • Quotes from 3 or more consultants
  1. Travel Costs
  • Hotel and per diem – Joint Travel Regulations (JTR) for the continental United States (CONUS) or outside the continental United States (OCONUS)
  • Air fare – Quotes from travel agency, airline, or travel website
  • Rental cars – Quotes from travel agency, rental car company, or travel websites
  1. Material Costs
  • Quotes from 3 or more vendors
  • Vendor invoices for like items
  1. Other Direct Costs
  • Quotes from 3 or more vendors
  • Vendor invoices for like items
  1. Costs Related to Office or Facilities Rentals
  • Lease agreements
  • Rental broker quotes
  1. Fringe Benefits Costs and Rates
  • Annual fringe benefits budget. This budget is based on payroll tax requirements, worker’s compensation rates, company leave policy, and other company fringe benefits, including:
    • Health care and disability insurance
    • Company paid retirement expenses.
  • Historical fringe benefits costs and rates for reasonableness (for comparison)
  1. Overhead Costs and Rates
  • Annual overhead budget
  • Compare to historical overhead costs and rates for reasonableness
  1. General and Administrative (G&A) Costs and Rates
  • Annual G&A Budget
  • Compare to historical G&A costs and rates for reasonableness

Although this may seem like a long list of documents, the time and effort it takes to have them ready will pay dividends when you’re asked for them; and it could make the difference between winning the contract or not. The goal is not just submitting a bid, but submitting a defensible bid.

If you need assistance in preparing your bids or want more information about our government contract and accounting services, contact us at KDuncan & Company.

Benefits of Outsourcing Accounting

5 Benefits of Outsourcing Your Accounting    

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If you’re a small business owner who feels overwhelmed by the myriad tasks involved in keeping the books, you’re not alone. Accounting takes a lot of time and effort, but it’s time and effort well spent because every successful business relies on solid accounting information to operate smoothly on a daily basis and realize long-term growth. On the flip side, poor accounting and failure to keep good financial and business records can be devastating to a company.

Small and startup companies can benefit by outsourcing several aspects of their business, but accounting is one of the most important ones they should consider. In fact, more and more companies – approximately 40%, according to a KPMG survey – are choosing to outsource their accounting. Why? Because it makes good business sense for all the reasons listed below.

  1. Saves time

    Outsourcing your accounting is more operationally efficient because it frees you up to do what you do best; run and develop your business. If you’re spending more time on keeping your books than making money, it’s time to consider outsourcing. As Small Business Trends points out, “Small business owners need experts to keep the books straight while they make money.” Outsourcing allows your employees to use the expertise they were hired for in support of those business goals. You want to spend your time and talent wisely and focus on improving productivity and generating revenue.

  2. Saves money

    When you consider the overhead costs involved with hiring your own accountant or keeping an internal accounting department – salaries, benefits, payroll taxes, hardware and software and other supplies – outsourcing your accounting can save you a significant amount of money. Some estimates project savings of up to 62% when you outsource your accounting, especially considering businesses typically spend 2-5% of revenues to properly train and staff internal accounting departments. A professional accountant can also save you money by preventing you from making an inadvertent – but costly – financial mistake with your records or paperwork.

  3. Provides valuable expertise

    Keeping the books, maintaining records, preparing for audits, etc. requires skills and experience you may not have. This is particularly true for government contractors where financial costs incurred are the basis for pricing and billing to your federal clients. While you may be able to learn how to do your own accounting, doing so could take more time and effort than it’s worth. And mistakes in this arena can cost you your business, so it’s probably best to leave it to the experts. Not only can they do it more quickly, thoroughly, and accurately, but they also help to keep your business out of trouble with DCAA. Additionally, they have access to all the latest regulations, standards, resources, and contacts. Most small business will not have the resources to procure the guidance of an experienced GovCon CFO is you had to employ them full-time. However, procuring eight hours per month or quarter from a seasoned professional could be extremely valuable.

  4. Provides tailored accounting services

    You may just need bookkeeping or you may need a CFO, or you may something in between. Outsourcing your accounting enables you to get assistance with only those accounting tasks that you need. Thus, you avoid paying a controller to do bookkeeping.

  5. Provides objective third party perspective of processes and financial records

    This is beneficial in several ways. First, having an outsourced accountant overseeing the books and financial records can provide you an impartial view of checks and balances on your financial transactions. A third party accountant can also give you an extra set of eyes on your records to keep everything accurate. As an entity that has access to all the intimate financial details of a client, the outsourced accountant can develop a relationship with the client as a trusted objective advisor. Finally, an out-sourced accountant brings the experience and knowledge the comes from working with a myriad of business environments.

Each business must decide what is best for them depending on their situation with re-spect to outsourcing accounting or not. For all the reasons listed above, many businesses – especially small ones – decide to let the professionals take care of their ac-counting needs. Not only can it save you time and money, but ultimately it will give you peace of mind that it’s getting done correctly. And that way, you can focus on what you’re truly good at – running your business and refining your core products and services.

If you’re a small federal government contractor and need assistance with your accounting needs, contact KDuncan and Company. We offer a full range of financial accounting services. Contact us here.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company. 

how to choose an accountant

How to Choose an Accountant: 10 Things to Look For

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If you’re a small business owner and realize that you need to outsource your accounting, the next step is to find an accountant; but what should you look for? Although there are plenty of options, it’s important to choose your accountant wisely because that individual will be an important asset to your business and help it grow. Conversely, a bad accountant could impact your business financially and even get you into legal trouble.

Two things you’ll want to think about as you start the process are: 1) what accounting tasks you need help with and 2) whether you need help on a long-term basis or on a one-time basis. Both of these considerations will affect who you choose. With this in mind, here are 10 things to look for in an accountant:

  1. Specific expertise relevant to your business

    Depending on what your business is, an accountant who has experience in your industry and understands your specific needs is extremely important in finding someone who is not just a good accountant but also a good fit for your business. In fact, The Daily MBA lists relevant industry experience as one of the top five criteria you should consider when you’re looking for an accountant and says that, “Choosing an accountant is equivalent to hiring an expert on your team.” For example, if you are an online business owner, “the ideal accountant would be is one who is working with or has had an experience working with other e-commerce businesses.” These accountants will understand the various nuances of your business and can save your business time and money, especially when it comes to taxes. Government contracting is a very unique industry and knowledge and experience of regulations, pricing, and government auditors is vital.

  2. Clarity of Needs

    It is important to be clear of your needs and requirements. Do you need the support of a CFO, senior accountant, or bookkeeper? The challenge is that as a small business the answer may be “all of the above.” But, you don’t want to pay CFO’s rates to get bookkeeping accomplished. If this is the case, you would want to seek a solution that provides a matrix of talent, experience, and billing rates.

  3. Certifications

    You probably want a certified accountant – a CPA – for several reasons. In general, CPAs are more familiar with tax laws; but more specifically, CPAs are licensed by the state and required to stay up-to-date with tax and other accounting disciplines to maintain their certification. SmallBusiness Trends points out that “the biggest reason to use a CPA for your business taxes is that a CPA is eligible to represent you before the IRS in an audit, while an accountant is not.” Particularly as your business grows and your finances become more complicated – especially related to taxes and audits – you’ll find you really need a CPA.

    Some accounting tasks, such as bookkeeping, tax preparation, and general financial management don’t need a certification. If an accountant is not certified, they should nevertheless have the credentials to show they have experience in the areas you need help with. Small Business Trends suggests using a good portal like Phlexable to check the credentials for you.

  4. Location

    Do you need your accountant to be where you are or can you work with someone in a remote location using cloud-based services? You’ll have to determine whether the location of your accountant matters to you or not. Your options for who you choose will expand if you’re comfortable using cloud-based accounting services; but if it’s important for you to have your accountant with you, you’ll be limited by location. Keep in mind that if you find someone outside your local area, you’ll need to make sure they’re experts in the tax laws that affect you and your business.

  5. Client base

    Check the client base of a prospective accountant. Are the clients similar in size and scope to your business? Has the accountant been with certain clients as they grew in size? That can give you a sense of whether the accountant can adjust to a business that grows over time. Remember, too, that an established firm with a large client base may not meet your specific needs. As Inc. points out, “Some businesses feel more comfortable employing a large, name-brand firm. But while one of the Big Four firms might seem attractive, you have to ask yourself whether a small firm will be overlooked. You also have to know what makes you comfortable as a business leader. You may feel more at ease with face time with a partner in a smaller firm.”

  6. Length of time as an accountant

    The longer someone has been working as an accountant, the more experience they likely have and the greater chance they will know the tricks of the trade to be able to do the job more effectively.

  7. Type of software accountant uses

    Finding an accountant who knows and/or uses the same software you use, is important to prevent issues over sharing data. Exporting and importing data, even if it’s possible, can be time-consuming and lead to mistakes. You also need to be careful about the security of highly sensitive financial information as you send the data back and forth. One common solution in today’s world is utilization of cloud hosting services. Here, both you and your accountant would have access to your accounting data 24/7.

  8. Recommendations and references

    The accountant you’re considering should be able to provide good recommendations and references that you can check. You may have found someone through your own network (your local chamber of commerce or business association, etc.), in which case they already come with at least one recommendation. Make sure your referrals come from a professional network or someone you trust. Once you find someone, it’s always important to verify credentials and see how well they worked with their clients, particularly clients that have a business that’s similar in size and complexity as yours.

  9. Initiative

    The best accountants are proactive and go beyond the basic accounting tasks you’ve asked of them. They not only manage your finances and complete your taxes, but they also give you recommendations on how to save money or do things more efficiently. They make the effort to learn about what your company specifically does. Forbes explains that “The right CPA goes beyond just handling your case by the numbers; he or she will be able to answer questions and thoughtfully counsel you on mindful financial planning across all areas of your business.” This is what separates a good accountant from a great accountant.

  10. Good Rapport

    This is an intangible quality that doesn’t come with a certification or any level of experience, but it speaks to how well you can work with a particular individual. Just like anyone you employ, you need to be able to get along and ideally, you should enjoy working with that person. With all the things that need to be worked out (i.e., how to communicate, what the work arrangements are) as well as the level of trust you need to have in that person (considering they handle your finances), having a strong rapport with your accountant is critical.

At some point in your business, an accountant will be a must. Taxes are not something you can afford to mess with, and accounting is way too time-consuming for business owners. When it comes to finding a good accountant, the options are numerous, ranging from large accounting firms to local mom and pop accountants. It certainly helps to know what to look for; and the key is to choose one you can trust with your finances, one who suits your needs as a government contractor, and one who has all the necessary experience, credentials and certifications to help your business succeed.

KDuncan & Company specializes in assisting small and mid-size government contractors. If you need accounting support, contact us.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company. 

How To Prepare An Indirect Rate Budget

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Budgets are of vital importance to government contractors. First, your budget is a great planning tool. It forces you to think about your company’s direction and the associated expenditures. In addition, your budget provides the basis for determining the pricing on cost proposals. This budget will be the document that government auditors and pricing specialists will want to see as justification for the indirect rates bid in your cost proposals. It provides an important component in determining whether you will make money on the contract. Second, the budget will provide a yardstick to use in assessing your financial performance. Finally, if you are submitting provisional rate requests to DCAA or your cognizant agency, this budget is the basis for that request.

Three things to remember:

    1. Your budget should be in the same format as your chart of accounts.
    2. Be fairly conservative when estimating your expected volume of business for the coming year. You don’t want your budget indirect rates to be lower than you can perform.
    3. Periodically compare your actual indirect rates to your budgeted and contracted rates. Make adjustments to your costs where possible to stay within your budgeted rates.

Have questions about indirect rates? Contact us today!

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.

Best Mileage Tracker App

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How many of us keep our mileage log up to date for tax purposes? If you are a government contractor, you are required to keep a log in order to have car expense reimbursements and/or lease expenses be deemed allowable.

The world has become much simpler because there are apps available that make these tedious tasks very simple.  They use the GPS in your smart phone to create the log. I looked at a couple and the best mileage tracker app I found is one called TripLog. Each time that my Android connects to Bluetooth in my car, the tracker starts.  At the end of each trip (Bluetooth disconnects) , the app prompts me to choose whether the trip was business, personal, medical, etc.  If other than personal, the app calculates and displays your tax deduction.  If you drive more than one car, the app knows which one you are using for the current trip.

Finally, all of this information is loaded into the cloud and the reports are available to you to view or download into spreadsheet format.  I even get a weekly report emailed to me showing the past week’s travel for me to review. That’s why I think this is the best mileage tracker app out there.

Could it be any simpler?  No notepads, or spreadsheets, or pieces of paper to maintain.  Even better, no blank stares when the CPA, DCAA auditor, or IRS auditor asks you for your mileage log.

Have any other apps that you use that make your life easier? Share them in the comments below!

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.

Cost Budget

How to Prepare a Cost Budget

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If you have not started, now is the time to prepare your direct and indirect costs budgets for next year. Budgets are of vital importance to government contractors. First, your budget provides the basis for determining the pricing on cost proposals. This budget will be the document that government auditors and pricing specialists will want to see for justification for the indirect rates bid in your cost proposals. It allows you to determine whether you will make money on the contract. Second, the budget will provide a yardstick to use in assessing your financial performance. Finally, if you are submitting provisional rate requests to DCAA or your cognizant agency; this budget is the basis for that request.

To prepare a cost budget, you will do the following steps.

  1. Estimate your expected volume of business for the coming year.
  2. Estimate your direct costs given the volume of business expected.
  3. Estimate the indirect costs in each indirect cost pool.
  4. Calculate the indirect rates for the coming year.
  5. Compare the budgeted indirect rates with historical indirect rates. If there are any substantial variances, analyze and be able to explain them. There could be errors.
  6. When you are satisfied with your costs and indirect rates, publish this budget as you baseline for costing out cost proposal for the coming year.

Three things to remember when preparing a cost budget:

  1. Your budget should be in the same format as you chart of accounts.
  2. Be fairly conservative when estimating your expected volume of business for the coming year. You don’t want you budget indirect rates to be lower than you can perform.
  3. Periodically compare your actual indirect rates to your budgeted and contracted rates. Make adjustments to your costs where possible to stay within your budgeted rates.

Visit our events page for more on government accounting training.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.