Many DoD contractors enjoy the benefits of submitting their interim public vouchers direct to the finance office, bypassing the lengthy review and approval process of DCAA, the ACO, and others. The direct billing process improves cash flow and significantly reduces the Government's administrative burden. The authority to approve direct billing is delegated to the contract auditor (usually DCAA) and until yesterday, was limited to those contractors with "approved" billing systems.
DCAA established criteria for adequate billing systems. For non-major contractors, those with sales under cost-type contracts less than $100 million per year, the criteria included (i) maintaining an adequate accounting system, (ii) establishing billing rates, (iii) maintaining cumulative allowable costs by contract, and (iv) adjusting billing rates whenever appropriate. For major contractors, the requirements were even more stringent.
On August 17, 2010, DoD removed the requirement that contractors need to have an approved billing system in order to participate in the direct billing program. DoD did this to ease the requirement, especially for small business, to qualify for direct billing, thereby reducing DoD administration and conserving resources in processing low risk payment vouchers. Click here to read the entire text of DoD's new policy.
If you have been wanting to participate in the direct bill program but were precluded because of the "adequate billing system" standard, this might be the right time to hop on board. Contact your local DCAA for more information.