This guest blog from our industry partner PVBS‘ Chief Executive Officer, Bernard Mustafa, addresses the challenges commercial enterprises with government contracting divisions face when preparing their incurred cost submissions, and highlights the benefits of utilizing a modern ERP system that is optimized for government contract project management. Microsoft Dynamics AX offers critical functionalities that can be used across the enterprise for commercial and government business lines.
In my past two blogs, I discussed the challenges government contractors face in developing their incurred cost submissions. The incurred cost submission establishes the final actual indirect rates used for costing and billing purposes on your auditable government contracts. The problem is that large commercial enterprises with significant government contracting operations may be saddled with a legacy ERP system that does not support this process, which wastes a tremendous amount of time, dollars, and energy for the government contracting or headquarters accounting team. Some systems also do not provide the project accounting functionality to capture the information at the level of detail the government requires.
In these cases, they probably need to manually derive their incurred costs on spreadsheets.
The other challenge is when the company uses multiple ERP systems across the enterprise and has not been able to adequately integrate the incurred cost submission process across the government contracting and headquarters operations.
We meet with hundreds of government contractors each year and have been providing Microsoft Dynamics-based ERP solutions for well over a decade. Some ERP systems in use at the companies we’ve been meeting with are not able to manage data in the format that’s needed to be able to complete the ICE schedules. This makes the process of developing incurred cost submissions even more problematic. If it’s not easy to pull the data out of your ERP system to build the schedules, you need to manage this manually using spreadsheets your accounting team probably built years ago. This approach is fraught with danger. If the data is incorrectly entered into the spreadsheets, the likelihood of errors is high.
It’s critical that the ERP system is set up to provide the data to be able to support the incurred cost submission process and then correctly populate the required electronic schedules. If your enterprise is large and has a significant government contracting operation, Microsoft Dynamics AX is a great choice.
Microsoft Dynamics AX for Government Contractors supports the creation of incurred cost submissions. Here are some highlights:
- Out-of-the box solution uses cubes technology so it is tied into the database and easily customizable.
- Allows your team to focus on more important cost accounting tasks instead of spending their time manually entering data into spreadsheets.
- Efficient solution that delivers structured data in an unstructured format.
- Links contract-related transactions that are recorded to the source documents that will be required by the auditors. Examples are invoices from vendors, labor distribution and payroll.
We are continuing to develop our solution to provide greater efficiency and effectiveness for large commercial enterprises with significant government contracting business lines.