“SMALLTOFEDS” By Ken Larson
“A growing small enterprise can enhance competitive rate development and cost management by effective cost center utilization in federal government contracting.”
_________________________________________________________________________________
“A cost center is a single, pricing, accounting, and billing entity within a company, organized for a group of business lines and clients with close similarities for technical and management purposes. It has its own unique overhead rate and houses the projected direct cost labor dollar base and associated expenses for that base.
A cost center is also a financial consistency template that runs from long range planning through proposal pricing, accounting, billing and closeout for the contracts it houses. It is the way DCAA and contracting officers view major aspects of your business and your rates for that business.
INITIAL COST CENTER EXPERIENCE
Enterprises that have not experienced federal government contracting typically base their initial proposals and bid submissions to the government on their commercial quotation approach and related market rates. This usually involves a single company cost center approach with both government and commercial work together at the general ledger level.
When the company gains experience in government contracting through audit exposure during proposal fact finding/negotiations, as well as accounting and billing, it becomes apparent that government cost accounting standards (CAS), job cost accounting and cost management at lower levels than the commercial general ledger are necessary to succeed. At that point a business system to support the new requirements begins to take shape.”
Comments