Managing Government Contracts in Deltek Vision By June R. Jewell, CPA & Melissa Garner Acuity Business Solutions

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1 Managing Government Contracts in Deltek Vision By June R. Jewell, CPA & Melissa Garner Acuity Business Solutions While Deltek Vision was not specifically programmed to handle government contracts, many of the features and functions of the system were developed with some GovCon requirements in mind. Most Government Contractors are required to manage data, produce reports and calculate invoices according to rigid guidelines that are in compliance with the Federal Acquisition Regulations (FAR) or other state and local requirements. In order to be fully compliant, specific processes must be put in place and carefully monitored to ensure consistent application. The goal of most government contractors is to be able to pass a DCAA audit. Specific requirements for complying with the FAR and passing an audit are laid out in detail at The following are the specific areas that need careful attention and potential re-configuration in order to ensure compliance: Chart of Accounts / Account Groups One of the primary objectives of a DCAA audit is to evaluate how direct and indirect costs are accounted for in the accounting system. Careful layout of the Chart of Accounts and diligent data entry processes will ensure that indirect rates such as Overhead, Fringe Benefits, and General & Administrative (G&A) expenses can be calculated from the accounting data in the general ledger. It is also extremely important to ensure that Unallowable expenses are clearly segregated, and excluded from the other indirect cost pool account ranges. It is recommended that when designing the Chart of Accounts in Deltek Vision, that you review your indirect rate structure and create account ranges that coincide with your cost pools. We recommend an account structure that looks similar to the following: 1000 s Assets 2000 s Liabilities 3000 s Equity 4000 s Revenue 5000 s Reimbursable / Direct 6000 s Fringe 7000 s Overhead 8000 s G&A/B&P/BD 9000 s Unallowable Account Groups can also be used to group accounts into logical categories which will make it easier for reporting and supporting your rate calculations to auditors.

2 Project Info Center / Work Breakdown Structure (WBS) Many government agencies can be very specific about how costs are tracked on projects and specific Work Breakdown Structure (WBS) may be required for each project. You may need to be creative with your project WBS including using the highest level of the WBS for the contact, and using delimiters for further breakdown to track costs on sub-tasks, Contract Line Items (CLINs) and other types of Accounting line items. You may also need to use one of the lower levels to designate the cost type on CPFF contracts Vision Version 7 which is being released in Q3 of 2012 will have the ability to track contract funding modifications. For Vision 6.2 and lower, you can use user defined grids to track contract modifications. You can also create user defined fields to track all types of contract information. Special attention must be given to setup of the Billing terms. Please see the billing terms section below for a more detailed description of the issues with Billing Terms setup. The Team tab can be used to designate who is allowed to charge to specific Projects. Security can be put in place to prevent staff who are not assigned to a project from charging time on their timesheet to that project number. If you are using version 6.1 or higher, you might consider moving the companies/contacts grid to the Team tab to make it easier to see the entire team in one place. User Defined Fields There are many areas that using user-defined fields can save time and provide additional management reporting capabilities. Some of the more common usage for the user-defined fields and tabs include: Contract modifications grid Contract details / contract brief Contract provisions can use workflows for contract approval routing Period of performance need workflow Contract closeout processes Security clearances grid HR data management fields Timesheet Floor Check tab see below Storing of actual and provisional rates in a grid for enhanced reporting Billing Rates For most types of contracts such as Time and Materials and Fixed Price, Deltek Vision is configured to work as specified out of the box. However, for Cost Plus contracts, the billing rate tables are not used as the rate is grabbed from the time records.. See Billing Terms below for further explanation of how the rate tables and the Billing terms work together to produce the correct calculations on Cost Plus contracts. Billing rates can be setup with a rate that changes each year based on escalations in the contract. This is accomplished in the billing rate tables using the effective date capability.

3 Billing Terms Configuring Deltek Vision to work for GovCon billing requires careful setup and potentially some creativity. Depending on the types of contracts that you have, you may have to use a Work Breakdown Structure (WBS) that uses all three levels as well as delimiters within each level to break out CLINS, ACRYNS and Sub-tasks. For each of these WBS levels the billing terms may need to be set up differently. This is especially true of Cost Plus contracts that require that direct labor cost be burdened with Fringe, Overhead and G&A in a cumulative way. The labor terms will need to be set to Rate times Multiplier (see setup for billing rates above). The burdening of the rates is accomplished using Add-ons in the billing terms Add-on tab. Because Vision only allows tracking of project costs at three levels Labor, Expenses and Subcontractors, requirements to burden different types of costs at different rates (herein called Cost Types), could require very creative use of the WBS.

4 Timesheets Time tracking is one of the most important parts of the system and must be managed carefully to ensure DCAA compliance. Most of the requirements for timesheets can be handled by establishing detailed written policies and procedures and ensuring that employees are trained on these processes. Careful enforcement of these policies is critical to ensure passing of an audit. A good timesheet policy will include: Detailed instructions for making changes to a saved time record. We recommend that a policy be put in place that time record line items are never changed, and instead a negative and positive record should be entered to make any changes. Comments should be required for all negative records explaining the reason for the change. Electronic signatures should be turned on in Timesheet Configuration Approvals need to be turned on and detailed policies need to be established for timesheet approvals Configure the system so that employees can only see the projects that they are assigned to. This can also be enhanced with integration to resource planning scheduling. Expenses Depending on your company s requirements, you may require per diem lookups and calculations on your expense reports. Vision can t do this. One suggestion is to put a lookup to GSA per diem site on the employee s dashboards. Labor Distribution / Accounting This is an area where Vision does a very good job to ensure government compliance. One of the primary requirements of government contracting is the segregation of costs to direct and indirect cost objectives (projects). The government requires what is called Total Time Accounting. This is a calculation that takes place each pay period to dilute labor costs (or the reverse) when a salaried employee works more than the number of hours in a pay period. The Adjust Salary Job Cost Utility in Vision should be run by the accounting department every pay period, or if you add time, change an employee s rate or make timesheet adjustments in the transaction Center. The end result is that you should be able to tie out labor between the General Ledger, the job cost reports and the payroll ledgers. Depending on the chart of accounts setup, cost will automatically be distributed to the correct GL Accounts including Direct Labor (for time charged to Regular Projects), and to multiple Indirect Labor accounts in the indirect cost pools such as Overhead, Fringe accounts (such as PTO, holiday, etc.), G&A, IR&D, B&P and Unallowable. Invoices Again, Vision is already configured to work for time and Materials and Fixed Price contracts with little manipulation. For Cost Plus contracts, custom invoice formats may be required. Acuity Business Solutions has developed an invoice format that has cumulative totals for current and jobto-date as required by most Federal government agencies. You may also be required to submit a SF1034 and SF1035 voucher to submit your billing to the government.

5 Reporting Vision cannot provide all the reports you will need for a DCAA audit and you may need to export reports into Excel. Acuity Business Solutions has developed an add-on module for Vision called GovCon Plus (see below) that will automatically calculate the value of your cost pools and an unlimited number of actual indirect rates. If you have Cost Plus contracts, you will need to allocate actual indirect costs to projects to see total burdened value and compare actual indirect costs to provisional (billed). At the current time this cannot be done in Vision, however, Acuity is working on adding this as an additional add-on for the GovCon Plus system. As part of the annual reconciliation on most government contracts, you will need to be able to compare billing at provisional rates to what would have been billed at actual rates. If actual rates are higher you may be able to seek reimbursement from the government. If your actual rates are lower, you may have to give money back. This makes it essential to stay on top of your actual rates on a monthly basis. On an annual basis you may be required to prepare an Incurred Cost Submission (ICE) that reconciles all the costs on your contracts and presents your financial data to the government for reconciliation. It is made up of many detailed and cumbersome schedules that can take a great deal of time. The GovCon Plus Indirect Rate Calculator (IER) can assist with preparing information for the Incurred Cost submission. Business Development/Opportunity Tracking There are many ways to configure Deltek Vision to enhance your capture and business development processes. Some of the ways you can utilize the CRM module to improve business development success include: Vision CRM can be integrated with Deltek GovWin IQ (formerly GovWin, Input & FedSources) to gain market intelligence and import RFP data directly into the Opportunity Info Center. You can utilize user defined fields and workflows to: Manage and automate the Go/No Go process Manage your capture process with user defined fields and workflows Manage the opportunity close-out process Create plan from opportunity > create project from plan or create project from opportunity and information will flow

6 Introducing GovCon Plus Acuity Business Solutions has developed GovCon Plus in response to our client s needs to automate the calculation of indirect cost rates to save time and reduce risk. GovCon Plus can: Solve the problem of managing complex Indirect Expense Rate (IER) calculations Produce a Summary and Detailed Statement of Indirect Rates report for the DCAA auditor Eliminate elaborate spreadsheets Be deployed in a hosted environment or on-premise installation Be set up in a few hours and never has to be adjusted Store your general ledger detail in the system for easy reconciliation to Vision Allow you to use the Vision Account Groups to simplify setup Can go back as many years as you have general ledger data in Vision to calculate rates Has a simple user interface and minimal training required - -

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8 Client Testimonials for GovCon Plus Michael Sabatier, Comptroller Blaine Warren Advertising The simplicity and clean design of GovCon Plus does exactly what it is intended to do saving us time by eliminating hours of manual input for one time period. GCP does it instantly over multiple time periods and with minimal instruction needed. Kathy Nelson, Accountant AGEISS, Inc. Acuity provided excellent training making the GovCon Plus program very easy to use. AGEISS has a complex incurred cost rate calculation that includes four intermediate pools and three final rate pools. During the training, AGEISS received helpful instructions, detailed information, and immediate attention when challenges occurred. Leslie Langham, Controller Aarcher, Inc. This add-on module is exactly what we have needed. It is easy to setup and provides great reports. We no longer have to run reports out of Deltek then re-key the data into off-line spreadsheets, and our indirect rates are literally less than a minute s calculation away, anytime we need them!