Accounting Systems for SBIR Phase II Contracts

There is a provision in most SBIR Phase I contracts cautioning contractors that if they intend to submit a proposal for Phase II work on a cost reimbursement basis,they must begin implementing a Government-approved accounting system if they do not already have an approved accounting system.

This is really poor wording. The Government does not approve or disapprove accounting systems or the software program that drives those systems. It reviews accounting systems to determine whether they are adequate to meet requirements for Government contracting purposes. For more on the myth of Government approval, see our earlier blog post here. Okay, so maybe you're thinking we're making too fine of a distinction here - "approved" or "adequate" - there are still certain expectations, right? Yes there are certain expectations. Those expectations are captured in the SF Form 1408, a form the Government uses to determine whether an accounting system is adequate for the type of contract contemplated. You can download a copy of the form here. SBIR contractors contemplating a Phase II proposal should download the form and use it to self-assess their systems.

Another great (and free) source of information is Information for Contractors published by DCAA. Although the current version is five years old and sorely needs updating, it remains a good resource for contractors trying to navigate the contracting environment. Chapter 2 of this Guide includes details on what the Government considers when using the SF Form 1408 to assess the adequacy of an accounting system. Where the form is lacking in information and detail, this Guide will help you understand what the Government requires and why it is important. You can download the Guide here.