DCAA-compliant software
A decision framework for selecting DCAA-compliant software: required modules, audit trail requirements, and indirect cost pool configuration. Book an assessment.
DCAA-compliant software
DCAA-compliant software is any system — accounting, timekeeping, or both — that satisfies the Defense Contract Audit Agency's requirements for cost accumulation, segregation, and audit trail as defined in DFARS 252.242-7006. The phrase is used broadly: it can refer to a complete ERP system, a standalone timekeeping tool, or a combination of tools that together address the 18 criteria.
The critical clarification: DCAA does not certify or approve software. "DCAA-compliant" is a description of what a system does, not a designation DCAA issues. Any system, properly configured, can be compliant. Any system, poorly configured, can fail.
The four categories of software evaluated for DCAA compliance
1. Purpose-built govcon ERP Examples: Deltek Costpoint, Deltek Vantagepoint, Unanet, Jamis
These systems were designed from the ground up to meet DCAA requirements. The default configuration addresses most or all of the 18 criteria. Implementation risk is lower because the system is not being stretched beyond its design intent. Cost is higher.
2. Mid-market ERP configured for govcon Examples: Dynamics 365 (with govcon partner configuration), Oracle ERP Cloud, Sage Intacct
These platforms have the underlying capability to meet DCAA requirements but require significant configuration. A govcon-specialised implementation partner is mandatory — a standard Dynamics or Oracle implementation will not produce a DCAA-compliant system. Cost varies; implementation risk is higher than purpose-built systems.
3. Timekeeping software only Examples: QuickBooks Time (configured), Harvest, Clockify (enterprise), dedicated govcon timesheet tools
Some contractors use a general accounting system alongside a dedicated timekeeping tool that satisfies DCAA's labour criteria (5 and 6). This works only if the accounting system handles the remaining criteria. The integration between timekeeping and accounting must produce a reconciled labour distribution report that feeds directly into the project ledger.
4. Combined SMB accounting + govcon add-ons Examples: QuickBooks + BQE Core, QuickBooks + Procas, Sage 50 + govcon modules
The lowest cost option. Carries the highest compliance risk. Appropriate only for contractors with limited, fixed-price contract exposure. The add-ons address some DCAA criteria but cannot resolve the architectural limitations (no multi-level WBS, no native indirect rate engine) of the underlying accounting system.
Module requirements by compliance criterion
A DCAA-compliant software configuration must include:
| Module | Criteria addressed |
|---|---|
| Job-cost ledger (multi-level WBS) | 1, 2, 4, 9, 13, 14 |
| Indirect rate pool engine | 3, 10, 12 |
| Compliant timekeeping | 5, 6, 17 |
| Monthly close and reporting | 7, 11 |
| Unallowable cost identification | 8, 15 |
| Billing/invoicing (government formats) | 15 |
| Subcontract management | 14 |
| IR&D/B&P tracking | 16 |
| Progress payment documentation | 18 |
A system that covers 15 of 18 criteria is not DCAA-compliant — DCAA evaluates all 18. A missing criterion in timekeeping or indirect cost allocation will produce an "inadequate" finding regardless of how well the system performs on the other 17.
Configuration: the difference between capable and compliant
The most common cause of a DCAA finding is not software incapability — it is misconfiguration. Systems fail pre-award surveys because:
Timekeeping lockout not enforced: the software supports period lockout, but the configuration allows employees to enter time for closed periods. The auditor tests this by attempting to enter time for a prior period. If the system allows it, the criterion fails.
Indirect rate pools defined incorrectly: the pool structure in the system does not match the disclosure statement the contractor submitted. If the G&A pool includes costs the disclosure says should be in overhead, the rate calculation is wrong. The auditor reconciles the system to the disclosure.
Unallowable costs not excluded from billing: FAR 31.205 costs (entertainment, advertising, etc.) are in the chart of accounts but are not tagged as unallowable, so they flow through billing calculations. The auditor pulls a sample of costs and traces each to its source document and billing treatment.
Subcontract costs not tracked by contract: subcontractor invoices are posted to a vendor account, not to a project ledger entry that links to the specific prime contract. Criterion 14 fails.
Total cost of DCAA-compliant software
Costs below are implementation estimates, not list prices. Actual costs depend on user count, contract complexity, and the implementation partner's hourly rate (typically $150–$350/hour for govcon-specialised ERP consultants).
| Category | Implementation | Annual license + maintenance | Timeline |
|---|---|---|---|
| Purpose-built govcon ERP (Deltek, Unanet, Jamis) | $30,000–$600,000 | $20,000–$200,000 | 4–18 months |
| Mid-market ERP + govcon config | $80,000–$400,000 | $25,000–$300,000 | 9–24 months |
| Timekeeping only (add to existing accounting) | $5,000–$30,000 | $5,000–$20,000 | 1–3 months |
| SMB accounting + govcon add-ons | $10,000–$50,000 | $10,000–$30,000 | 1–4 months |
Ready to evaluate your options?
Government contracting accounting decisions carry long tails. A system that fails a DCAA pre-award survey delays contract award; one configured incorrectly from day one creates audit findings on every subsequent incurred cost submission.
Book an assessment — a structured conversation with a practitioner who has worked through DCAA audits, pre-award surveys, and incurred cost submissions. No sales deck. No software demos unless you ask.
Related guides
Frequently asked questions
Purpose-built govcon ERP (Jamis for small contractors; Unanet for mid-size). These systems are pre-configured for the 18 criteria. A focused implementation targeting the compliance criteria specifically — not a full ERP deployment — can be done in 4–6 months. The tradeoff is that you implement only what you need to pass the survey, then expand from there.
Ready to evaluate your options?
A structured conversation with a practitioner who has been through DCAA audits, pre-award surveys, and incurred cost submissions. No sales deck.
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