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Passing your Pre-Award Accounting Survey – Direct Costs by Contract

To assist with preparing for a Pre-Award Survey of Prospective Contractor Accounting System, in this series of articles we are reviewing the Evaluation Checklist criteria on the Standard Form 1408. The Standard Form 1408 serves as a guide for making sure you are prepared for the audit, and as such we will be reviewing each checklist criteria within the SF1408 to help assist in creating and maintaining an adequate accounting system. Our first article discussed proper segregation of direct and indirect costs. In this article, we will discuss the identification and accumulation of direct costs by contract.

As a reminder, these articles are meant to serve as a starting point, not a master guide. DCAA, or other parties performing the audit, will perform varying procedures to determine system adequacy. Achieving a DCAA approved accounting system is feasible for any organization, but may require changes to your policies and procedures and does require a comprehensive analysis of your overall accounting system, and that includes more than just the software itself.  In this article, we are going to discuss the following checklist criteria:

2b. Identification and accumulation of direct costs by contract

FAR 31.202 defines a direct cost as “any cost that can be identified specifically with a particular final cost objective”. The most common example of this would be direct labor, direct travel, and direct materials.  If you reference back to Part 1 of the series, there is detailed information about segregating direct costs from indirect costs, and what constitutes a direct cost. The checklist criteria 2b above deals with a step after we have identified a cost as a direct cost as opposed to an indirect cost.

Once we have identified a cost as a direct cost, we then must assign these costs to a contract to achieve the criteria above. Let us take direct labor as an example. If we have a Help Desk Technician that works on Contract A, we need to “identify” and “accumulate” that employee’s salary/pay by contract in the accounting system. We must first “identify” the cost by contract. To do so, we need the Help Desk Technician to specify on their timesheet that they worked on Contract A. Next, to “accumulate” the cost by contract, when we are recording direct labor for the Help Desk Technician in the accounting system, we need to tell the accounting system that they worked on Contract A based on their timesheet. If the Help Desk Technician in a different pay period splits their time between multiple contracts, we need to split their labor cost between the multiple contracts in order to accumulate the direct costs by contract. This would be done based on the hours worked on each contract specified by the employee on their timesheet.

Putting the criteria into practice

To illustrate how to satisfy the checklist criteria, we will use QuickBooks as an example, since it is one of the more widely used accounting systems by small businesses in the government contracting industry. The terminology and processes will vary depending on your accounting system, but the concepts remain be the same. In QuickBooks, you have “Customers” and “Jobs”. Each Job must be associated with a Customer. In most cases, the agency or prime contractor you are contracting with will be your Customer. You may have multiple Customers set up for an agency, for example if you are working with multiple contracting offices within one agency, but that setup is not important for this discussion.

Let’s assume we are awarded a contract with NOAA to provide IT Help Desk Support. We will first create a new Customer if NOAA is not already created in the system as a Customer. After the Customer is created, we will add a Job. Notice when you go to add the job in QuickBooks, there is a requirement for there to be a Customer associated with every Job. Once we enter our Job Name and any other relevant information about the Job, we can save our Job and now have our contract set up in the accounting system.

With our contract set up in the accounting system, we can begin to identify and accumulate direct costs by contract, in order to satisfy the criteria for our Pre-Award Survey. The next step in our process will be charging our direct costs to the appropriate contract when entering bills, journal entries, and other transactions into the accounting system. For example, the NOAA IT Help Desk contract may require the purchase of computer equipment specifically for that contract. When the computers are purchased, and the vendor sends a bill for the computers, that bill must be coded to the contract in to identify and accumulate direct costs by contract. In QuickBooks, when creating a Bill and entering the detail information, there will be a column labeled “Customer: Job”. If the Bill is for a direct cost, then it needs to have a Job specified. In this case, we would enter the IT Help Desk Support Job name into the Customer: Job column, which is telling the system that this expense is associated with that Job.

If creating a journal entry to record direct costs, the same concept applies. There will be a column in the journal entry screen also labeled “Customer: Job”, where you would specify the appropriate contract if you are recording direct costs. As part of a monthly review of your financial statements, you can run a Profit & Loss by Job report. When reviewing this report, you should ensure that all direct costs are in fact record to a specific Job. This will help ensure you are following the steps to meet Criteria 2b. If you are using a project-based accounting system such as Unanet or Deltek Costpoint, you can actually set up the system so that charging to a direct cost account requires a project input. Unfortunately that functionality does not exist within QuickBooks, but failure to charge direct costs to a project can easily be spotted with a proper review of your month-end accounting reports.

We will close with a couple additional points to consider. The first is that for direct costs to be properly charged to contracts, any other systems or source documents in use should be designed properly. For example, your timesheets and expense reports need to be designed so that employees can select which contract they are charging their time to or which contract a certain expense was related to, if a direct expense.

The final note is that if you are having difficulty charging expenses to certain contracts, you might need to circle back to Criteria 2a, which specifies that you need to properly segregate direct costs from indirect costs. Assume that your company operates in Maryland, but has two government contracts in Texas, and you want to have office space for the billable employees in Texas. You may have determined this to be a direct cost since the rent expense exists solely to support these two contracts. When you go to identify and accumulate this direct cost by contract, you may be having trouble determining how to record this cost to each of the contracts. The reason for the difficulty is that in almost all cases, this rent expense is going to be an indirect expense given the nature of the charge. Therefore, we have failed to properly segregate between direct and indirect costs and need to focus on properly implementing that first criteria. As we will discuss throughout this series, passing the pre-award survey is not about just about software and configuration. Policies, procedures, and training of personnel are just as critical components to maintaining an adequate accounting system.

LRZ Consulting is a full-service outsourced accounting and bookkeeping firm specializing in the government contracting industry. We provide support for QuickBooks, Deltek CostPoint, and Unanet Financials and assist with maintaining a DCAA approved accounting system. If you are looking for a free comprehensive analysis of your accounting system, please contact us here.

Four Signs Your Government Contracting Business has Outgrown QuickBooks


QuickBooks is the most widely used accounting software for small businesses, and for good reason. QuickBooks is easy and efficient to use, it gets constant upgrades and patches to improve functionality, and can be a very powerful tool if used properly. However, if you are a government contractor focused on growth, you will likely reach a point in the lifecycle of your business where you have outgrown QuickBooks and require a more powerful and sophisticated accounting system that is designed specifically for the government contracting industry. The following are four areas that might trigger the need for a change in accounting systems. There are no hard and fast rules for when you should change from QuickBooks, but a combination of the following might help you identify an appropriate time to make the change.

Cost-Reimbursable Contracts: Don’t let the marketers fool you – you do not need an accounting system more robust than QuickBooks in order to pass a DCAA Pre-Award Accounting System Survey. DCAA will be looking at whether you can properly accumulate, segregate, and record costs on government contracts. This can all be done within QuickBooks, and you can learn more about passing your pre-award audit here. With this in mind, don’t let the possibility of a cost-reimbursable contract, or an IDIW that requires an approved accounting system, be the reason you switch from QuickBooks to a different system.

However, once you actually have that cost-reimbursable contract awarded and operating, your invoice generation becomes more complex and your need to track indirect rate calculations closely becomes far more important. You can stay on QuickBooks and still accomplish this, but it becomes a lot more difficult and requires quite a bit of manual work. The more robust accounting systems like Unanet and Deltek Costpoint have features that will allow you to set up your rate calculations, including pools and bases, and then the system does much of the work for you. Those systems will also produce outputs that can be used to assist in the preparation of your incurred cost submission at the end of the year.  

Volume Increase: There’s no headcount or revenue level that suddenly makes it imperative that you switch off QuickBooks. But eventually, as you grow to a certain size, a more robust accounting system built specifically for government contractors will end up saving a significant amount of time for your finance and accounting team. Functions such as processing labor allocations, generating project reports, and creating invoices will all become easier, quicker, and more accurate with an accounting system such as Unanet or Deltek.

Consolidation & Multiple Entities: Consolidation is one area where QuickBooks is lacking. Rightfully so, as it was built for the small business in mind, and most small businesses do not need to perform consolidations. If you have subsidiaries or multiple entities that require consolidation and are using QuickBooks, it will probably be necessary to do manual consolidations outside of the accounting system itself. This can be a tedious and sometimes burdensome task, that could also lead to errors. When you switch from QuickBooks to a higher-level accounting system, that new system will likely have the functionality to house multiple companies or entities within one system. The system can then be programmed to perform a consolidation within the accounting software itself, taking out the majority of processing and reducing the risk of any manual errors.

Forecasting and internal reporting: QuickBooks does have a budgeting function within their software, but it is limited in functionality and of course is not built specifically for the government contracting industry. If you are looking for more advanced forecasting and reporting, QuickBooks will likely fall short at a certain point. Areas and functions that will benefit from a more advanced system include the following:

  • Resource planning: As a government contractor, specifically under Time & Material type contracts, you want to avoid leaving money on the table or exceeding funding on any of your contracts. This often requires careful resource planning. The robust accounting systems will let you schedule out budgeted, or planned, hours throughout the course of the contract or contract period. This can be done at the individual level and can factor in headcount, expected paid-time-off, holidays, and a number of other factors to properly forecast and track you incurred cost.
  • Limitation of Costs: Certain contracts will require you to notify the government when you reach a certain point of incurred costs in that specific contract. Instead of having to manually track this, you can set triggers so that the accounting system alerts you when you reach these points.
  • Strategic Planning: As a business grows, there will be more contracts, more service offerings, and more divisions. It will become more important to closely monitor margins. It is also critical to monitor which contracts, divisions, and services are generating the most profit so that resources can be properly allocated.

These are just a handful of the items you will want to consider when evaluating your accounting system. QuickBooks is drastically cheaper than the other accounting systems mentioned in this article and pretty much any advanced or industry-specific accounting software. If implementing a new system, you will incur significant costs for the implementation itself and ongoing license fees. Your current staff might also require a lot of training under the new accounting system. But if you have grown to a certain size and complexity and QuickBooks is no longer meeting all of your needs, the long-term benefits of switching off QuickBooks may far outweigh the cost of the new system.

LRZ Consulting is a full-service outsourced accounting and bookkeeping firm specializing in the government contracting industry. We provide support for QuickBooks, Deltek CostPoint, and Unanet Financials. If you are looking for a free comprehensive analysis of your accounting system, please contact us here.

Passing your Pre-Award Survey – Segregating Direct & Indirect Costs

Over the past few years, we have seen a dramatic increase in the number of solicitations requiring a contractor to have an “approved accounting system”. A recent example is the draft Request-For-Proposal for the CIO-SP4 Contract, which requires contractors to maintain an adequate accounting system. We have also seen more and more large prime contractors pushing this requirement down to their subcontractors. For smaller contractors, this means that at some point, there is a good chance they will need to go through a Pre-Award Survey of Prospective Contractor Accounting System performed either by the DCAA, another cognizant agency, or an independent CPA firm. Although this may seem like a daunting task for smaller contractors, it is a manageable undertaking with proper guidance. Simply put, the review is going to look at whether your accounting system, policies, and procedures are designed and functioning properly to comply with requirements set forth by government contracting regulations.

To assist with preparing for a survey, we are going to review in a series of articles the Evaluation Checklist criteria on the Standard Form 1408 (SF 1408), which serves as a guide for helping you prepare for the audit. These articles are meant to serve as a starting point, not a master guide. If this is your first time through the audit process and you lack in-house personnel with expertise in this area, I would encourage you to seek out a consultant to help prepare for the audit. As we go through the Evaluation Checklist, we will also demonstrate a practical example for how to address each item in your accounting system.

In each article we will tackle one of the checklist criteria, and discuss the principles behind the criteria and how to begin putting processes in place and setting up your accounting system in order to meet the criteria. The checklist criteria we will discuss this week is:

2a. Proper segregation of direct costs from indirect costs

FAR 31.202 defines a direct cost as “any cost that can be identified specifically with a particular final cost objective”. For most contractors, the distinguishing factor between a direct and indirect cost is based on whether a cost is directly allocable to a contract. If a contractor employs a Subject Matter Expert, and that employee works on a specific contract and charges their time to that contract, the result is a direct cost of that contract. Alternatively, when that Subject Matter Expert takes vacation or performs administration functions, those hours can’t be directly assigned to any one contract, and is therefore an indirect expense.

There are two key components to bear in mind when properly segregating direct costs from indirect costs. The first component is establishing a method for the costs to be distinguished between direct and indirect based on the source document and any systems in place. The second component is how the accounting system is designed to segregate those direct costs. Most contractors will have some component of labor that is a direct cost. To properly segregate costs, the timekeeping system must allow for employees to record their time to direct charge codes as well as indirect charge codes. Similarly, purchase orders and expense reports should be designed so that employees can specify whether the cost is direct or indirect, and what contract the purchase relates to for direct costs. The second component to segregating direct costs from indirect costs relates to how the accounting system and chart of accounts is set up. The accounting system should have separate accounts for direct expenses vs. indirect expenses.

Putting the criteria into practice in your accounting system

A starting point for meeting these criteria is a properly designed chart of accounts. You want a numbering sequence for your chart of accounts that clearly distinguishes between direct costs vs. indirect costs, and allowable costs vs. unallowable costs. A common method for numbering your chart of accounts is as follows:

5000-5999: Direct Costs

6000-6999: Fringe (indirect)

7000-7999: Overhead (indirect)

8000-8999: General & Administrative (indirect)

9000-9999: Unallowable costs

This design allows for a clear segregation between the different types of costs. To take the example further, instead of having a general “Salary” or “Labor” account, you will likely have a combination of the following accounts:

– Direct Labor (5000 series)

– Holiday, PTO (6000 series)

– Overhead Salaries (7000 series)

– G&A Salaries (8000 series)

– Unallowable Labor (9000 series)

Note how each of these accounts should be within the first numbering sequence to properly segregate the costs. If you are using QuickBooks, you likely will want to classify your 5000 series as “Cost of Goods Sold” for the account type. This allows you to further build in the functionality of segregating direct costs and making a clear distinction between direct and indirect costs. QuickBooks however won’t allow for a further breakdown of account types where you could separate Fringe, Overhead, G&A, and Unallowable. All of those accounts will need to be set up in your chart of accounts as an account type of “Expenese” or “Other Expense”. You can however use parent accounts – for example you can create an account 6000 that is called Fringe Expenses, and then not charge to that account, but have all other fringe accounts as a sub-account of the parent 6000 Fringe Expense account. More robust accounting systems such as Deltek Costpoint & Unanet Financials will give you the functionality to classify an account as direct, fringe, overhead, G&A, or unallowable based on the pools and bases you set up within those systems, but that goes beyond the scope of what we will talk about today, and is certainly not a requirement to meet the checklist criteria being discussed here.

As a final note, it is important to keep in mind that with all the evaluation criteria, to pass the review you must do more than just set up the accounting system properly. Setting up different accounts for direct and indirect expenses is the first step, but there must also be policies and procedures in place, as well as systems and processes built around the accounting system to allow for proper segregation of costs. This requires building a timekeeping system that allows charging to proper categories of labor and specific contracts. In addition, this requires training personnel, specifically accounting personnel, so that they are familiar with the principles of government contract accounting, and can correctly distinguish between direct and indirect costs.

For example, if the CEO of a company is not billable on a given contract, but perhaps they spent their entire day speaking with the CO for that contract and managing their employees on that contract, the CEO may logically think that their time should be charged to that specific contract. This would not be correct though, as they are performing overhead and administrative functions that are not directly allocable to the contract, and should not be charged as such. Personnel must be trained to charge their time properly, otherwise the setup of the accounting software itself to segregate direct and indirect costs becomes meaningless.

Please send an email with any of your questions and look for future articles in the series. Click here to see our services for government contractor accounting.

The End of Deltek GCS Premier

As most Deltek GCS Premier users already know, Deltek has begun to discontinue support for their widely-used legacy product that has become synonymous with government contractor accounting. While some companies have already established transition plans and determined which accounting solution to implement, countless companies remain on GCS Premier and will need to decide in the near future what their plan is to replace GCS Premier. The upcoming start of the new year will be a popular transition date for current GCS Premier users to allow for a clean accounting cut-off. For companies that are yet to decide which accounting solution to switch to, this article outlines some of the options for small and mid-sized businesses in the government contracting industry. Those options can be segmented into three primary categories that we will discuss:

  • Switch to an alternative Deltek product
  • Move to a mid-tier accounting software provider that offers competitive solutions and pricing compared to GCS Premier
  • Implement a lower-cost accounting solution such as QuickBooks

Alternative Deltek Products

Deltek has the largest presence in the government contractor accounting software industry. Their products were built to handle cost reimbursable contracts, to assist with the preparation of an incurred cost submission, and to address a variety of other accounting and operational issues pertinent to government contractors. Many GCS Premier users either have, or will shortly, transition to one of Deltek’s other products, primarily CostPoint. Staying with Deltek offers many positives; users will have familiarity with the accounting software, the transition/implementation should be painless since it is still a Deltek product, and the company will continue to use what is widely considered the premier accounting software for government contractors. And CostPoint is not just an accounting system, but rather can be used as a full ERP system. On the other hand, we do come across many companies where a Deltek product is simply not the right fit. This may be because of the nature of operations, the size of the company, or the make-up of the accounting department. Some of the most common complaints about Deltek are that it is not user-friendly or intuitive, it can be inefficient for processing transactions, and that it can be expensive compared to some other available options. The discontinuance of support for GCS Premier may be a perfect opportunity for companies to evaluate if a Deltek product is truly the right fit for their organization, or if one of the options below is a more logical choice for their next accounting solution.

Mid-Tier Accounting Solutions

As we just mentioned, one of the biggest downsides to Deltek products are complaints about ease of use. This specific issue is a large reason that some competitors, such as Unanet and Sympaq, have gained traction in the market. Pricing can vary quite a bit depending on the specific features you require, the number of users, and whether the delivery is cloud based or not, but in general these systems are priced near or slightly below Deltek GCS Premier. Unanet was a very popular timekeeping system amongst government contractors, but a few years ago they built out a full accounting solution that seeks to provide a seamless cloud experience, advanced project management capabilities, and an easy-to-use interface. Sympaq is offered both on-premise and through cloud delivery, and offers a similar platform compared to GCS Premier, but with some significant improvements to enhance efficiency and usability. These software systems were built with government contractors in mind, and allow for integrated timekeeping systems, billings modules to generate all major types of government invoices, and indirect rate calculations. You can visit either of their websites to watch webinars or request a demo, which may help you decide if they are worth investigating further.


At some point during your search for an accounting system, you may have heard that QuickBooks is “not DCAA compliant”. However, that is simply either misinformation, or a marketing tactic by some of the other players in the government contracting industry. No system, on its own, is DCAA compliant. A DCAA compliant accounting system requires properly designed and implemented policies and procedures, among other things. While certain accounting systems were designed to assist with achieving DCAA compliance, such as the Deltek products and other systems discussed above, there is nothing inherit about QuickBooks that would prevent a company from using the system and achieving DCAA compliance. QuickBooks is widely used by government contractors that have successfully passed DCAA reviews such as the Pre-Award Survey of Prospective Contractor Accounting System. The main appeal of QuickBooks for companies currently using GCS Premier is the potential cost savings and the improved efficiency. There are multiple versions of QuickBooks with different delivery methods which impact price, but if switching from GCS Premier to QuickBooks a company could likely achieve between $5,000 – $15,000 in annual savings on the software and storage alone. That is in addition to potential cost savings achieved by using what is widely considered a much more user-friendly and efficient accounting system when compared to any of the Deltek products. QuickBooks also now has hundreds of applications, including timekeeping systems and expense report systems, that seamlessly integrate with QuickBooks. There are also applications built specifically for government contractors that integrate with QuickBooks, such as ICAT Systems, which can calculate indirect cost rates and help generate reports used in preparing an incurred cost submission. The main factors that need to be considered when evaluating a potential switch to QuickBooks are the size and complexity of operations of the company. QuickBooks does lack certain functions that Deltek has built to address the needs of government contractors. This may lead to a reliance on spreadsheets and other manual functions when using QuickBooks. If your company is on the smaller side and lacks certain complexities, such as the presence of cost reimbursable contracts, then the reliance on certain manual functions may not be a significant burden. If on the larger and more complex side, the time and cost savings from certain aspects of QuickBooks may be lost because of the functions it lacks in comparison to Deltek and the other systems discussed above.

Next Steps

Unfortunately, there is no easy formula to follow to determine which accounting solution is the best for your company. There are a wide range of options in terms of functionality, customization, and pricing. Talk to your colleagues and see what their thoughts are on the accounting system they use, consult your CPA to see if they have any advice, and take demos of some of the different options. Cost is important, especially given the current LPTA environment. But equally important is the where the company is headed in the next two, five, and ten years. If there are aspirations for significant growth, make sure to factor that into your decision so that the company has a solution that it can continue to use as it expands operations in the future.

SBA’s Women-Owned Small Business Program

While it may not have made headlines, when the NDAA was passed in December 2014 it included a provision in the bill which allows women-owned small businesses (WOSBs) to be awarded sole-source contracts. Many would consider the progress in contracting with WOSBs to be disappointing in the few years since the bill passed. But the change should ultimately help the government continue to move closer to achieving its annual goal of awarding 5% of total contract dollars to WOSBs. As contracting with WOSBs does increase, the scrutiny over the program, along with size and certification protests, are bound to increase as well. This makes it as important as ever, whether you are currently certified as a WOSB or seeking to be, to think about whether your certification is accurate, and you are in fact eligible to participate in the program.

First and foremost, in order to be eligible for the program, you must be a small business. While affiliation rules and various other regulations can make that a complicated topic, we are only going to focus on the requirements specifically for the WOSB program. We also won’t discuss the requirements that are specific to economically-disadvantaged women-owned small businesses. For many organizations, it will be easy to determine if most of the criteria to certify as a WOSB are met. However, there can be subjectivity involved in certain requirements. For example, consider the following requirements to be part of the WOSB program:

  • – The Company must be owned and controlled by women
  • – A woman must hold the highest officer position and has the managerial experience needed to run the organization
  • – The Company must be in an industry in which women are underrepresented
  • – The women in the above criteria must be U.S. citizens

The third and fourth items are simple and straight-forward. In regards to item #3, the SBA has developed a list of NAISC codes in which WOSBs are underrepresented. The list can be found online, and you will want to check to see if your NAISC code is included in the list of codes eligible for federal contracting under the program.

When looking at item #1, you need to evaluate every aspect of the ownership and operations of the organization to make an accurate assessment. For example, if you are a corporation, a woman must hold at least 51% of each class of voting stock and 51% of the aggregate stock outstanding. You might only have one class of stock outstanding, and a woman may own 51% of the outstanding shares. This would indicate the organization is controlled by women. However, if the other 49% is owned by a male and there are unexercised stock options that, if exercised, would result in the male owning more than 49%, then there is not unconditional control by women. In this case the entity, with its current ownership structure, would not be eligible for the program. The issue of control is often the most complicated area. If we continue to look at a corporation, in order to participate in the program the Board of Directors must be controlled by women. This can be easily accomplished, but control is not as simple as just having a women-controlled Board. It also means that the long-term and day-to-day operations are managed and controlled by women.

In a July 2014 hearing, the Office of Hearings and Appeals weighed in on many of the items discussed above. A protest was filed alleging that Company ABC, a financial and management consulting firm, was not a WOSB. Company ABC is 100% owned by a woman, who also serves as the President of the company. The allegations included the following:

  • – The President lacked the managerial experience needed to run the company
  • – The Board consisted of two directors, one female (the President) and one male (the President’s husband), and this resulted in a female not having undue control
  • – The husband of the President exercised undue control over the company, as he was the primary point of contact for the company

It should first be noted that the protest was denied. However, the allegations provide important insight into aspects of an organization that could make the company ineligible for the program.

The basis of the first allegation was that the President had a Bachelor of Arts in film and a Master of Science in Adult and Continuing education, and therefore does not have the managerial experience necessary to run a financial and management consulting company. If the President had this educational background and had been say a teacher their entire career, they likely would not qualify for the program, as this background would not indicate the required level of managerial experience. However, in this case the President had over 20 years of experience in management positions. While that management experience was mostly in the film industry, the fact that it was in a different industry did not preclude the court from determining she possessed the necessary management skills. This is an important point to note, as it emphasizes that the regulations state there is no requirement for the women controlling the organization to have technical expertise.

The second allegation shows the complexity involved in determining control. While the Board did not consist of more voting female members than male, the court determined that because the President had the power to remove any director at any time, she had ultimate control. The Court further explained that the bylaws of the company stated that the President has “general supervision, direction and control of the business and the officers of the corporation”. If the husband truly ran the day-to-day operations or the long-term strategic decision-making, the company’s eligibility would likely be in question. But allegations as simple as the third item above, referencing the husband as the point of contact, do not prove a lack of control. In many instances, a primary point of contact will be an employee that heads the business development function of the organization. The fact that the President was not in charge of business development was not deemed to mean that she did not have control of the company or lacked the necessary managerial experience to run the organization.

As mentioned before, as the WOSB program grows, in our opinion it is likely that these types of protests will become more prevalent. That makes the analysis to determine whether you are eligible, as well as the initial certification process, extremely important. You don’t want to put your organization in a position where you are susceptible to losing your eligibility, as the consequences can be quite severe. This article only provides a brief overview of a few criteria for the WOSB program. The SBA has developed comprehensive guides and resources to assist you in the certification process, and there are various companies and law firms that can also provide assistance when needed.

We want to close with one quick note on the certification process for those who are nearing that stage. There are two ways a company can certify as a woman-owned small business; through a self-certification process or by going through a third-party certification from one of SBA’s approved organizations. The SBA does not recommend one method as being preferable, and while a third-party certification might sound “safer”, receiving a third-party certification does not mean you are not subject to bid protests. However, the third-party certification may make you more comfortable in knowing that you at least have had a qualified third-party evaluating whether they believe you are eligible for the program or not.

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