As organizations develop and enhance their government market strategy, specific attention should be given to control requirements such as those mandated by the U.S. Department of Defense (DoD). Developing, maintaining and assessing controls for these and other contract requirements go beyond an exercise of compliance. Effective controls and systems are often prerequisites for contract eligibility.
The DoD implements the rules related to contractor business systems through Defense Federal Acquisition Regulation Supplement (DFARS) contract clause 252.242-7005. This includes contract withholds for contractors found to have significant deficiencies within one or more of their applicable business systems.
In addition to the DFARS business system requirements, contractors are expected to have internal controls in place to address the unique requirements of government contracting. These controls should govern the entire lifecycle of a government contract, from making a bid/no-bid decision to contract closeout. While a standard commercial financial control framework will address many of the financial aspects of accounting for government contracts, it will not address the risks and controls that stem from the additional statutory and regulatory requirements related to the pricing, administration and accounting of government contracts.