Getting it right with time tracking compliance for DCAAApril 12, 2021
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If you areas a company bidding on contracts with the US government, particularly within the Department of Defense, you know that winning bids that which receive government funding must meet certain management requirements. As a good portion of such funding dollars may very likely be allocated to labor and project time, tracking employee time can be a big part of the project management. As with most US federal contracts, government projects require time tracking compliance for the purposes of future audits, project transparency, and accountability for the use of public dollars, and audits.
DCAA does not provide companies with a “certification of compliance”. The DCAA is simply a rule set that keeps companies within the lines of the federal law, generally accepted accounting practices (GAAP), and time tracking practices.
How does DCAA and time tracking work together?
Obviously, it’s expected that project hours are submitted by staff in a timely manner. However, in the case where contractors are required to perform a DCAA audit, corporate auditors will be looking to see that specific time tracking guidelines are being followed to ensure DCAA requirements are met. Failing to do so can have a major impact on contracts your company is currently performing, or bidding to win.
A basic DCAA checklist for time tracking
If your company is engaging with government contracts that require a DCAA standard for time tracking of staff project hours, the following is a breakdown of a few of the basic DCAA industry standards. While some are common sense, others require some decision making.
Enter time daily – An obvious requirement is one that all project managers would love to experience in a perfect world – all project employees enter their time within 24 hours of performance.
Every hour counts – Employees must record all hours that they work on a government project. There are also rules for rounding up and down project time to the nearest 15-minute or hour. This includes all regular time, overtime, and unpaid time allocated to the project. In the case where an employee’s entire role is a single project, possibly paid in salary instead of hourly wages, even their vacation time must be accounted for in submitted project hours.
Time can’t be submitted by the management – Project managers cannot be the person tracking and submitting time on behalf of employees. This keeps project data accurate and direct from the source (employee), but also prevents project managers from spending time on activities that are of less value to their position . If your staff can’t load their time independently, this is a management or process issue.
Demonstrate compliance task management – This involves the scheduling of compliance activities along with follow-up for corrective and preventive action (CAPA) around project tasks. Automated, escalating email notifications and reminders drive accountability and compliance task completion. Some companies have looked to companies such as AlignTime and Intelex for tools that work between their time tracking solution and chat communication tools (Slack or MS Teams). For example, AlignTime sends staff their project notifications and reports directly into chat, not email, where corrective measures get a higher staff engagement.
DMCA VS DCAA
If you are dipping your toe into US defense contracting, the Defense Management Contract Agency is a governing body that is responsible for administering government contracts, as well as actively overseeing the execution and management practices of US defense contractors.
While the DCMA closely monitors government contractors for compliance of all awarded contract terms, the DCAA has the primary focus of guiding a company’s time tracking and auditing practices. The DCMA is the governing body that requires DCAA audits and reviews of bidding contractors.
What types of audits does DCAA perform?
Prior to being awarded a government contract, the DCMA may require a pre-award DCAA audit, prior to signing. This ensures your company has set up proper project management practices and administration for the contract. This will examine proposal pricing, forward pricing rates, and the accounting system currently in place.
Similar, but more involved, is a post-award DCAA audit that can occur at any time during or after a contract to evaluate the successful execution of such guidelines and practices. Failure to meet these standards mid-project can jeopardize a contract.
What are the easy ways to ensure DCAA Compliance?
Something that is common amongst larger companies that are involved in bidding for US government contracts is engaging Regulatory Contract Partners such as Enhesa, CyberRegs, SiteHawk, or BNA. These companies keep track of regulatory changes that span industries, and even conditions for operating in foreign countries as a contractor. They help to identify where new regulations are applicable to your company’s circumstances.
The other very easy way to ensure you fall within DCAA compliance is to simply employ accounting and time tracking tools that are DCAA compliant. DCAA compliant software is a growing space with online enterprise solutions such as Intelex, TSheets, and Quickbooks that provide time tracking solutions to meet DCAA requirements. As mentioned earlier, other companies using time tracking solutions like Harvest, that are not DCAA compliant, may employ supportive time tracking tools such as AlignTime to follow DCAA guidance with direct in-chat message notifications and real time project reporting.