Not Understanding the FAR: As you might imagine, the Federal Acquisition Regulations address virtually every situation the government might face when buying products and services. As was mentioned before, understanding your particular niche within the FAR framework will help you isolate those areas of FAR that ultimately impact your operations. As a sovereign entity, the government also applies unique terms and conditions vastly different from commercial practices.
Incorrect Billing Rates: This little appreciated element of contract cost and pricing can have a dramatic impact on your company’s profitability and pricing of new work. It is critical to select an appropriate indirect rate structure along with competitive levels of those rates. Unfortunately, the government provides only perfunctory support for what is otherwise a very complex matter. Unless you have years of experience or have been exposed to job cost accounting (on steroids), you will need some extra help in this area.
Poor Accounting Data: Title 48 of the Code of Federal Regulations (otherwise known as the Federal Acquisition Regulations – FAR) specifies certain requirements for accounting systems for certain types of government awards. If the proposed awardee is not familiar with the requirements for that type of award, it is doubtful that a credible proposal can be submitted to the government. The complexity of these regulations make it difficult for even seasoned CPA’s to understand what all the regulations are and what they mean. This makes it very difficult for the novice to construct a cost volume in a Federal Award Proposal that is meaningful, will be supportable in negotiations and will provide for the potential awardee to avoid losing money on the award. In many cases, the cost and pricing data supporting the bid must be presented for review by the government before issue of the award. If this cost and pricing data is not in the format needed and expected, the possibility of award goes down.
Deliver Poor Quality: Just like in the commercial marketplace, the “bitterness of poor quality is remembered long after the sweetness of low price is remembered”. If the government receives low quality, it will be remembered in that department but also could be recorded on a government-wide basis
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