How do I prepare for a DCAA pre-award audit for a new cost-reimbursement contract?

The Defense Contract Audit Agency (DCAA) will typically review your proposed rates, accounting system, and cost proposals during a pre-award audit for a cost-reimbursement contract. You need to show that your accounting system can track direct and indirect costs, and that you have a consistent method for allocating overhead and general and administrative expenses. They will also look at your estimated labor rates, including your fringe benefits and overhead, to make sure they are reasonable and allowable. Make sure your timekeeping system is solid, showing how employees charge their time to specific contracts or indirect accounts. Also, be ready to provide documentation for any significant material costs or other direct costs you are proposing. They want to see that you understand and can comply with the cost principles outlined in FAR Part 31.