Post-Award Reviews
Passing pre-award was the easy part.
A pre-award determination judged your system on design. A post-award review judges it on what you have actually been doing, and a material weakness can put your payments at risk. We prepare contractors for these, and we fix the ones that go wrong.
- 12 years inside DCAA
- 100+ DoD contractors audited
- CPA led
- QuickBooks, Costpoint, SAP & NetSuite
- Remote, nationwide
Pre-award and post-award are not the same test
A pre-award survey under SF 1408 asks a design question: is this system capable of accumulating cost properly for a cost-type award? It is forward-looking, it does not require operating history, and a well-prepared young company passes it comfortably.
A post-award review asks a much harder question: has the system actually been operating the way you said it would? Now there is history to examine. Real timesheets, real corrections, real indirect rate application, real billings. Auditors test transactions rather than inspect a design.
This is where contractors who sailed through pre-award get into difficulty. Nothing was misrepresented. The system simply drifted. Headcount grew, people got busy, the timekeeping policy stopped being enforced, someone started booking a cost to the wrong pool, and no one reconciled job cost to the general ledger for eight months.
What triggers a post-award review
These reviews are not random, and most contractors get some warning if they know what to watch for.
You started performing on a cost-type contract
The pre-award determination got you the award. Once you are billing actual cost against it, the government has a direct interest in confirming the system works in practice.
Contract value or volume grew
Risk-based audit planning follows the dollars. A contractor whose federal revenue tripled is a materially different audit target than they were two years ago.
A CAS-covered or DFARS-clause award
Where the Contractor Business Systems clause applies, your accounting system is formally subject to review against the DFARS criteria and to the consequences that follow.
Something surfaced in another audit
An incurred cost audit that finds unallowables sitting in a pool, or billing that does not reconcile, frequently prompts a closer look at the system that produced it.
Time simply passed
Systems are re-examined periodically. A determination from four years ago says very little about a company that has doubled since.
You self-reported a change
Changing accounting systems, restructuring your indirect rates, or reorganizing segments can all prompt a review. This is a good reason to plan such changes deliberately.
How we work a post-award review
Test yourself before they do
We run the review the way DCAA runs it, including transaction testing on your actual timesheets and billings. It is far better to find a problem yourself than to have it written into a report.
Fix what testing surfaces
Usually process and enforcement rather than system architecture. Timekeeping discipline, reconciliation cadence, and unallowable screening are the usual culprits.
Rebuild the documentation
Policies and procedures that match what you actually do. A manual describing a process nobody follows is worse than no manual, because it evidences the gap.
Support the review itself
We manage data requests, prepare your staff, and handle the auditor relationship so responses are consistent and controlled.
Corrective action, if needed
Where a deficiency is identified, we write the corrective action plan, implement it, evidence it, and prepare you for the follow-up so the withholding gets lifted.
The Criteria
What DFARS 252.242-7006 actually requires
The Accounting System Administration clause sets out the system criteria. Unlike the pre-award checklist, these are assessed against how you have really been operating. This is an abbreviated view of the areas most often tested.
| Area | What gets tested post-award |
|---|---|
| Sound internal controls | Whether controls exist and whether people follow them. Documented policies that nobody applies fail this. |
| GAAP conformity | That your books are actually maintained on the basis you claimed, consistently, all year. |
| Cost segregation | Transaction testing that direct and indirect cost were classified correctly and consistently in practice. |
| Contract cost accumulation | That cost was accumulated by contract and CLIN as work was performed, not reconstructed later. |
| Indirect allocation | That pools and bases were applied as disclosed, and that nothing moved between pools without justification. |
| Timekeeping and labor | Sample testing of actual timesheets: daily entry, approvals, and how corrections were documented. |
| Unallowable cost | Whether FAR 31.205 unallowables were identified as incurred and excluded from billings and claims. |
| Billing accuracy | That public vouchers agree to the books, use correct provisional rates, and respect funding and ceilings. |
| Limitation of cost / funds | That the system produces the data to give required notice before you overrun. |
| Reconciliation | That job cost reconciles to the general ledger, routinely, and that someone owns doing it. |
| Adjusting entries | That adjustments are supported, approved, and traceable rather than unexplained plugs. |
| Management review | Evidence that someone in authority actually reviews the output rather than signing whatever is produced. |
Consequences
What a material weakness actually costs you
Where the Contractor Business Systems clause at DFARS 252.242-7005 applies (renumbered 252.242-7998 by DoD Class Deviation 2026-O0050), a business system determined to have a material weakness can lead the contracting officer to withhold a percentage of your payments until the weakness is corrected. The withholding is five percent per affected system, capped at ten percent across all systems, and drops to two percent once the contracting officer accepts your corrective action plan and you are carrying it out. That clause reaches only CAS-covered contracts. On a contract that is not CAS-covered, your system can still be disapproved with no money withheld, and the disapproval still follows you to buying activities and into pricing reports on your proposals until it is resolved.
Since January 17, 2025 the DFARS says material weakness where it used to say significant deficiency. That is not only a new label. A material weakness means a reasonable possibility that a material misstatement of the system’s information will not be prevented, or detected and corrected, in time, so the test is tied to materiality and a pattern of exceptions matters far more than one isolated error.
For a contractor running on normal working capital, that is not a paperwork problem. It is a cash flow event that arrives while you are still paying the people doing the work. We have seen it force borrowing decisions that had nothing to do with how the business was performing.
The disapproval also travels. A disapproved accounting system affects your standing in future competitions, complicates cost-type bids, and invites attention to your other business systems.
The good news is that these outcomes are procedural rather than punitive. There is a defined corrective action path, and deficiencies get resolved regularly. What matters is responding quickly, with a credible plan and evidence, rather than arguing.
- Payment withholding until the deficiency is corrected
- A corrective action plan owed to the contracting officer on a defined timeline
- A follow-up review to confirm the fix actually took
- Weakened position on future cost-type competitions
- Increased scrutiny of your estimating, purchasing, and other business systems
Questions
Frequently asked
We passed our pre-award survey. Are we not already approved?
Not permanently. A pre-award determination reflects your system as reviewed on that date, against a design standard. Post-award reviews test operation, and they can reach a different conclusion about the same system without anything having been misrepresented.
Do you help contractors whose system was already disapproved?
Yes, and it is a common way clients reach us. We work from the actual audit report, address each deficiency specifically, build and implement the corrective action plan, and prepare you for the follow-up review. Disapproval is a setback, not a permanent condition.
How much of our payments can be withheld?
Where the Contractor Business Systems clause applies, commonly five percent per affected system, subject to the limits and procedures in DFARS 252.242-7005. The exact treatment depends on your contract clauses, which is one of the first things we check.
What is the difference between an accounting system review and a business system review?
The accounting system is one of the contractor business systems addressed in the DFARS clauses. Others include estimating, purchasing, material management, property, and earned value management. A review may cover the accounting system alone or form part of a broader look at several.
How long does preparation take?
A readiness assessment takes a short time. Remediation depends entirely on what it finds. Timekeeping discipline is usually the longest item because it requires sustained behavior change before sample testing will show a clean record.
Can you help if the review is already scheduled?
Often yes. Tell us the date and what has been requested, and we will tell you honestly what is achievable in the time available rather than take an engagement we cannot deliver.
More
Related services
DFARS business systems
All six business systems, how a material weakness is handled, and the payment withholding rules.
Purchasing system reviews (CPSR)
Purchasing policies, subcontract files and a mock review before DCMA runs its Contractor Purchasing System Review.
DCAA-compliant accounting systems
Design, configure, and document a system that meets DFARS 252.242-7006 and survives a system review.
SF 1408 pre-award surveys
Get your accounting system judged adequate so you can accept a cost-type award.
Incurred cost submissions
Adequate ICE submissions filed on time, with schedules that reconcile the first time.
Indirect cost rate structures
Pool design, allocation bases, provisional billing rates, and the annual true-up.
Contract pricing & proposal support
Cost volumes and basis of estimate for FFP, cost-reimbursable, and T&M solicitations.
Government audit support
Preparation and representation for DCAA and DCMA audits and buying command cost analysis.
Forward pricing rates (FPRP & FPRA)
Forward pricing rate proposals and agreements so every future bid prices faster and with less argument.
CAS Disclosure Statements
Form CASB DS-1 preparation, cost impact analysis, and disclosed practice compliance.
Terminations, REAs & claims
Termination settlement proposals and requests for equitable adjustment. Frequently underclaimed.
Has anyone tested your system since pre-award?
If it has been a few years, or you have grown meaningfully since, it is worth finding out where you stand before an auditor tells you. Tell us your contract types and when you were last reviewed.