Where information means insight



DoD Underscores Requirement of Segregating Covid-19-related Costs with 3610 Guidance

by Kim KosterGovCon, Government Compliance

May 11, 2020

For government contractors that managed to secure relief under the CARES Act or PPP, big questions still remain about compliance, reporting, auditing, and accounting. As usual, the details matter, and in the case of these emergency pieces of legislation, the details weren’t always addressed upfront. So, it’s good news that the Department of Defense (DoD) recently provided guidance for contracting officers (COs). Click here for a copy of the Class Deviation – CARES Act Section 3610 Implementation. But what’s most compelling is that these guidelines make it clear that it’s more critical than ever that GovCons prioritize their relationship with their CO during this unusual time, and have strong control measures in place. First, here are a few basic highlights from this recent guidance: COs must put in writing that a GovCon cannot perform its contracted work at a government facility due to facility closures, nor can they do the job via telework. Paid leave for employees idled by the facility closure, including sick leave, may be direct charged to the affected contract, and not as regular leave that would have been recorded as fringe expense in the normal course of business, so long as it can be attributed to the Covid-19 outbreak from Jan. 31 – Sept. 30, 2020. The leave charged to the contract must be necessary to maintain the workforce in a ready state to permit a return to work upon facility re-opening and to ensure the safety of the workers. Finally, and most important of all, the 3610 guidance is very clear that in order to be eligible for reimbursement of the cost of paid leave, GovCons must segregate these specific costs and actions so that compliance with these terms can be reasonably identified. The guidelines say, “segregation and identification of costs can be performed by any reasonable method, as long as the results provide a sufficient audit trail.” How can GovCons do this simply and effectively? This article in Compliance Week: Preparing for the compliance caveats that accompany CARES Act, PPP, gives good counsel on the value of ERP to resolve this segregation issue. Your Unanet platform will enable your business to accurately track, manage, and segregate costs associated with the Covid-19 outbreak so you can specifically demonstrate to your CO precisely where your business incurred costs that are eligible for reimbursement. Want to understand more about how Unanet can be a solution to helping your business segregate costs for reimbursement and manage your projects? Check out our white paper, The Business of Projects.


Clearview Software Is Now Unanet A/E, Forging a Path for More Investment in Architecture and Engineering ERP Software and Service

by Carrie MahonPress Releases

May 02, 2020

Dulles, VA, May 4, 2020 – Clearview Software, the flexible project-based ERP software purpose-built for the architecture and engineering (A/E) industries, has officially changed its name to Unanet, the leading project-based SaaS-based ERP provider. The two companies’ merger gives A/E customers more resources, service and investment in their ERP solution. “This merger is proving beneficial to customers already, and by taking on the Unanet branding and name and integrating more wholly, we have greater strength to invest in our customers and their needs,” said Craig Halliday, CEO, Unanet. “We are committed to continued investment in all ERP product lines, and to the dedicated, specialized services every customer has come to expect from us.” Clearview Software’s primary ERP product, formerly known as InFocus, is now Unanet A/E powered by Clearview. The software functionality remains the same and will be a dedicated, specialized product for A/E customers under the broader Unanet product portfolio. Customers will also see new branding across the company and its employees, and one integrated website at Unanet has invested in significant enhancements of Unanet A/E’s functionality. Last month, customers benefitted from new features including an easy-to-use web app, invoice delivery and tracking, and payment facilitation powered by Stripe.  Unanet A/E will have more feature releases throughout 2020. Additionally, the company has hired almost a dozen staffers focused exclusively on development, support and sales for Unanet A/E. “We are one company with the resources to invest in and serve the A/E industries,” said Matt Pantana, senior vice president of product for Unanet, formerly the CEO of Clearview. “Together we are stronger, and by integrating our brands and names, we will help our customers thrive.” About Unanet Unanet is the leading provider of ERP solutions purpose-built for Government Contractors, A/E, and Professional Services. More than 2,000 project-driven organizations depend on Unanet to turn their information into actionable insights, drive better decision-making, and nurture business growth. For more information, visit Follow Unanet A/E at @UnanetAE on Twitter and Unanet-AE on LinkedIn.


Will COVID-19 Impact CMMC?

by Kim KosterGovCon

Apr 08, 2020

Background The rollout of the Cybersecurity Maturity Model Certification (CMMC) as a mandatory contract requirement for government contractors working with the Department of Defense (DoD) is an enormous undertaking involving government, a newly established non-profit, many independent assessors who need to be accredited, and up to 300,000 firms in the Defense Industrial Base. The CMMC Version 1.0 model was published on 1/31/2020 and, separately, the non-profit independent CMMC Accreditation Board (CMMC AB) was established. The CMMC AB will be responsible for training and certification of independent assessors that will verify that government contractors are compliant with CMMC. In case you missed it, check out our quick review of the CMMC in our blog post. A key purpose of the CMMC is to provide a unified cybersecurity standard for DoD acquisitions. The model includes five levels that describe the maturity of a government contractor’s cybersecurity practices and processes. Levels 1-5 are labeled Basic, Intermediate, Good, Proactive and Advanced/Progressive Cyber Hygiene respectively. All DoD government contractors will be required to be compliant with at least Level 1, with government contractors who manage Controlled Unclassified Information required to be at Level 3. Levels 1-3 of the CMMC are largely based on the NIST 800-171 standard. Learn more about these levels and the CMMC in our white paper. The next key milestones for CMMC include developing training material by the CMMC AB and the training of the first group of assessors. This was scheduled for late March through June. The schedule was recognized as challenging given all the work that needs to be accomplished to develop a robust mechanism that is cost-effective and affordable, especially for smaller businesses. In the June timeframe, the first RFIs with the CMMC requirement will be issued, with the first RFPs in October 2020. In parallel, changes need to be made to the DFAR rules that will make the CMMC standard law of the land (i.e. replacing NIST 800-171) by October 2020. Impact of COVID-19 on CMMC Schedule Given the rapid and unanticipated impact of Coronavirus/COVID-19, there are questions from many industry observers whether this demanding and aggressive schedule can now be accomplished. Katie Arrington, the Chief Information Security Officer for the DoD’s acquisition office, and who leads the CMMC effort for the DoD, is very active providing briefings on status and progress. Katie maintains that the DoD intends to stay on schedule while respecting health concerns and to do that, will turn to do more remote training via webinars. In a recent webcast, Katie was adamant that training of assessors will occur by June and RFIs with CMMC requirements are still expected to come out in June 2020 as well. Katie also recently confirmed that the DoD has achieved another important CMMC milestone and officially entered into an agreement with the CMMC AB for its CMMC program. As of early April, the Memorandum of Understanding has yet to be released publicly but is another indication that COVID-19 will not impact the timeline for the CMMC requirement for all DoD government contractors. In other recent developments that may be related to help the CMMC rollout stay on track, the DoD has assigned the National Institute of Standard and Technology to help create requirements for independent assessors under the CMMC program. The CMMC AB will remain as the main entity for overseeing training and certification for third-party evaluators. Katie stated that the CMMC AB will also have the authority to make modifications to the credentialing process. Katie noted that NIST will work to prevent conflicts in the certification process in line with the CMMC AB’s “very stringent ethical rules”. In summary, Katie’s schedule for CMMC continues to meet its milestones. While the schedule is very aggressive, the odds are that CMMC rollout will continue as announced.


What You Should Know About SF1408

by Kim KosterA/E

Mar 29, 2020

Overview of the Pre-Award Survey & Manual When becoming a government contractor there are many new things to think about, including the DCAA pre award survey. You are introduced to what feels like over 1,000 acronyms, audit after audit, and project management requirements. If you are a prospective government contractor with an award looming that has cost type work, your first encounter with DCAA will most likely be the Pre-Award Survey (SF1408). In this section, we will provide an overview of the SF1408 survey and audit. Before that, however, let’s do a quick review of DCAA Manual No 7641.90: Information for Contractors, which is a great resource for new and prospective contractors.   DCAA Manual No 7641.90: Information for Contractors Believe it or not, the DCAA doesn’t just loom over contractors with audits; they provide a lot of helpful resources for contractors to understand the various audits they may undergo and how to prepare! DCAA Manual No. 7641.90 provides an introduction to the DCAA and explains several audits including price proposals, incurred cost proposals, Pre-Award Survey, and more. This document is a must-read for anyone new to government contracting. Enclosure 2 of the document focuses on the Pre-Award Survey. If you are just getting started in the government contracting world, access the DCAA Information for Contractors.   The DCAA Pre Award Survey and Audit Overview The pre award survey is not an audit. It is an evaluation typically made by your contract administration office of your ability to perform a proposed contract. DCAA may be requested to provide information regarding the adequacy of your accounting system to accumulate the type of cost information required by the contract. Before the contracting officer (CO) requests a DCAA audit of your accounting system, the CO will ask you to complete the “Pre-award Survey of Prospective Accounting System Checklist.” You can find that checklist by going to the website, specifically the link below. The checklist provides documentation to the auditor on how your accounting system meets the criteria in the SF 1408. The CO will give the checklist to DCAA when they request an audit of your accounting system. To download the checklist, visit the DCAA website. The SF1408 or pre-award accounting system survey is an examination before contract award to determine the acceptability of your accounting system for accumulating costs for your prospective government contract. The audit scope is limited to obtaining an understanding of the design of the prospective accounting system so as to appropriately complete the SF1408 “Pre-award Survey of Prospective Contractor Accounting System,” and procedures essential to reach an informed opinion as to whether or not the design of the prospective accounting system is acceptable for accumulating costs and can generate the specific cost information that is required to execute a government contract. Organizations that are looking to get their first government contract may not want or need to install a new, more detailed accounting system unless awarded a contract. In this case, if the potential government contractor anticipates a contract award, it must have developed and designed a system that is operable, though not necessarily in use. You need to be in position to demonstrate the new system to the auditor and ready to implement the system prior to incurring any costs on the government contract. Sometimes the auditor may not think the system is acceptable. You and your CO will receive notification and typically will give you suggestions on needed corrections. Once you have incorporated the corrective actions, a follow up audit will be completed and hopefully the CO and DCAA will be satisfied. Once you have won the contract, you may be subject to an accounting system audit. The basic objective of this audit is to assure your accounting system is adequate for accumulating cost and passing those costs on through invoices presented to the government. This audit is requested by the CO when there is follow-up recommended from the pre-award survey or if no pre-award survey was done.   Is There Such a Thing as DCAA Approved Software? Just to be clear, there is no such thing as DCAA Compliant Software! It is your organization and procedures that will be assessed for compliance. That said, software such as Unanet, that is purpose-built for government contractors can significantly help you with achieving compliance. DCAA compliance requires that your accounting and related business processes which collectively including policies, manual procedures and tools be compliant. Software alone is not audited for DCAA compliance or certified, nor approved as DCAA compliant. However, Unanet software has been reviewed by DCAA auditors at more than one thousand customer sites and, along with the customer policies and procedures, approved as supporting DCAA requirements.   What the DCAA is Looking for in the SF1408 Segregation of direct and indirect costs Identification and accumulation of direct costs by contract Consistent allocation method for indirect costs to intermediate and final cost objectives Accumulation of cost under general ledger control A time keeping system that identifies employees’ labor by intermediate or final cost objectives A labor distribution system that charges direct and indirect labor to the final cost objectives Interim determination of costs charged to a contract through routine posting of books of account Exclusion from costs charged to the government contracts of amounts that are not allowable Identification of costs by contract line item and units Segregation of preproduction costs from production costs Far 31.202 defines Direct Cost FAR 31.203 defines Indirect Cost For the system to get an acceptable, all items above must be checked Yes or Not Applicable. Utilizing Unanet, you can be confident that you will meet the standards in FAR 53.209-I(f). Unanet Success Story With Unanet, Array successfully completed a DCAA audit that stated that their accounting system design complies in all material respects with the criteria contained in FAR 53.209-l(f), Standard Form 1408 (SF1408). “Unanet shone during our DCAA audit” – Bob Deegan, Senior Vice President and CFO Read the full success story The Importance of Using a Timekeeping System to Maintain Compliance One of the most important aspects of government contracting is maintaining compliance with a timekeeping system. As we touched on above and reviewed in our “DCAA compliant software” blog, remember that timekeeping software alone is not enough to ensure compliance. DCAA requires that the timekeeping process itself—collectively including policies, manual procedures, and tools—be compliant; timesheet software alone is not audited for compliance or certified, nor approved as DCAA compliant. However, timesheet software like Unanet has been reviewed by auditors at hundreds of customer sites and, along with the customer policies and procedures, approved as supporting DCAA timekeeping requirements. That said, let’s dive into the timekeeping requirements and what auditors are looking for. Keeping Track of Your Time Timekeeping procedures and controls on labor charges are areas are of critical concern for government contractors. The key to accuracy in labor charging is your employees. Training, training, and more training is critical so that employees understand the organizations policies and procedures and abide by them. Establishing a culture that understands the criticality of accurate and timely labor charging will encourage employees to get it right the first time. Timekeeping systems must meet the following requirements: There should be a segregation of responsibilities for labor-related activities. Internal controls must be established. An example would be that the responsibility for timekeeping and payroll should be separated. Policies and procedures must be crystal clear Controls must be monitored, and violations dealt with swiftly A culture emphasizing to employees the importance of accurate and timely timesheets. Reminders and training plans will help reinforce proper time charging. Employees need to have training and detailed instructions on completion of the timesheet: Record time daily Record time on the timesheet Time should be recorded by identifier (project, contract name, etc.). Employees should be able to access the description of the identifiers and their descriptions in the work authorization system. Documented process to change time sheet if needed Record all hours worked Certification that the number of hours worked and on what tasks are correct at the end of each period. A policy for timekeeping must be in place that includes the following: The supervisor should approve and cosign all timesheets The supervisor is prohibited from completing an employee’s timesheet unless the employee is absent for a prolonged period on some form of authorized leave. If the employee is on travel status, the supervisor for the employee may prepare a timesheet. Upon his or her return, the employee should turn in his/her timesheet and attach it to the one prepared by the supervisor. The guidance should state that the nature of the work determines the proper distribution of time, not availability of funding, type of contract, or other factors. The company policy should state that the accurate and complete preparation of timesheet are the employee’s responsibility. Careless or improper preparation may lead to disciplinary actions under company policies, as well as applicable Federal statutes.   Unanet Success Story Burns & McDonell was able to gain greater project visibility with Unanet’s time keeping solution and the flexibility that they gained allowed them to establish more best practices around their business rules and processes. After implementing, Burns & McDonnell: Achieved a quick and ongoing return on their software investment Has more accurate entry of time that led to better visibility into project issues and an enhanced ability to forecast true costs to complete projects Is able to be compliant with DCAA requirements through an improved annual process Maintains ad hoc reporting tools directly in the hands of their project management team Experiences better control over timesheet review and approval without undue administrative overhead Read the full success story   Why Unanet for Government Compliance? Unanet is purpose-built with the project or contract in mind. It is uniquely designed for government contractors and has been battle-tested for compliance rules and regulations. Our compliance features are built into the tool, making compliance part of the fabric of your business. Unanet currently has over 2,000 clients using and trusting the system. Unanet supports compliant accumulation and allocation of costs utilizing time keeping, expense accounting, cost pools, indirect rates, revenue recognition, and project management all in one truly integrated system. Whether you are a small new or a seasoned larger GovCon, you can count on Unanet for your compliance needs. Unanet is recognized by the audit agencies as being “compliant ready,” giving you an immediate advantage in the audit process. Make sure you’re prepared for a pre-award survey and an accounting audit. Learn more about SF1408 in our white paper, “SF1408 & Timekeeping,” or register for a demo to see how Unanet helps smooth the path to compliance.