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  • Question

    Is there a way to find out if a certain business who plans to do business with the government has an approved accounting system?


    In general, the need to evaluate a contractor’s accounting system stems from a contractual requirement for a contractor to comply with a contract term that requires reliable accounting information be generated by the contractor.  Most often this contract term is one that requires accounting information to determine amounts payable under the terms of a contract. 

    One such example of a contracting situation where an evaluation of a contractor’s or prospective contractor’s accounting system is needed is selecting contract type.  Specifically,
    FAR 16.104(i) reads:
    “Before agreeing on a contract type other than firm-fixed-price, the contracting officer shall ensure that the contractor’s accounting system will permit timely development of all necessary cost data in the form required by the proposed contract type.  This factor may be critical  --- (1) When the contract type requires price revision while performance is in progress; or (2) When a cost-reimbursement contract is being considered and all current or past experience with the contractor has been on a fixed-price basis. See 42.302(a)(12).”

    If the business you are interested in has been evaluated by a contracting officer for receipt of a prospective US government contract or has previously been awarded such a contract there may be documented evidence in the file maintained by the cognizant contracting officer regarding the acceptability of that business’ accounting system.  In addition to the procuring contracting officer other evaluative information may be available in the files of the contract auditors (Defense Contract Audit Agency) or administrative contracting officers (Defense Contract Management Agency). 

    However, as indicted in your question you are interested in “business who plans to do business with the government .“ This suggests to me that the companies you are addressing have not been and are not currently government contractors.  So, the likelihood that a government contracting officer has made an evaluation of these companies’ accounting system would seem remote.

    In summary, if a contracting officer has performed an evaluation such as is required as stated above, then the file documentation may be available to you in your quest.  If no such evaluation is available and relevant information is not otherwise on hand, a contracting officer may be required to perform such an evaluation and in doing so may seek the advice of Defense Contract Audit Agency (auditors) or Defense Contract Management Agency (contract administrators).   

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