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Volume 118: How DCAA Approves Your System; DOD NGA Mercury

Author

Kit Conway
March 19, 2026

In This Week's Newsletter:

Opportunity Alert – DOD NGA Mercury

Contact Katie: [email protected]

Department of War (DoW/DoD), National Geospatial-Intelligence Agency (NGA), Mercury.

On March 12, 2026, the Contracting Office issued an RFI seeking organizations with broad knowledge, skills, experience, and resources to maintain and modernize existing systems, as well as the capacity to support unexpected needs quickly. Questions are due no later than 12:00 PM ET on March 19, 2026, with responses due by 12:00 PM ET on April 2, 2026. The final RFP for this IDIQ is due to be released around August 2026, with an estimated award timeframe of January 2027. The competition type and contract value are currently unknown. Reach out to Hinz Consulting for any Business Development, Competitive Analysis, Graphics, Price-to-Win, or Proposal support, and continue to monitor SAM.gov for any updates in the procurement timeline.

Four to Follow

  1. Department of Commerce, National Institute of Standards and Technology (NIST), IT and Database Application Support Services II (ITDASS II). The Department of Commerce requires an industry partner to provide project oversight, equipment, administration, and technical execution, including the maintenance of accurate records of project activities. The final RFP of this $50M IDIQ is due for release around May 2026, with an award in October 2026. The competition type is currently unknown. Continue to monitor SAM.gov for further movement on this opportunity.

  2. Department of the Interior, Business Integration Office and Financial and Business Management System Support Services IDIQ (BIO FBMS). The Department of the Interior needs a contractor to provide operations, maintenance, new development, reporting, training, and system security services. The final RFP for this $250M Full and Open/Unrestricted opportunity is due to be released via GSA MAS by the end of March 2026, with a potential award date of June 2026. Continue to monitor SAM.gov and your eBUY portals for any changes to this opportunity.

  3. Department of the Army, Information Technology Services and Support for PD Acquisition, Logistics, and Technology Enterprise Systems and Services (ALTESS). The Army requires support for various software suites and tools, including Oracle Servers, Citrix XenApp, SAP, Tenable Nessus, McAfee Intrusion Detection Systems, and multiple Microsoft products. The final RFP for this $138M opportunity is due for release on or about September 2026, with a projected award of August 2027. The competition type for this effort is currently unknown. Continue to monitor SAM.gov for further movement on this effort.

  4. Department of Labor, Bureau of Labor Statistics (BLS), National Longitudinal Surveys Recompete (NLS). The Department of Labor needs a vendor to provide management, IT security requirements for data and systems, user services, advisory services, a respondent website, and survey preparation, along with additional tasks. The final RFP for this $32M Full and Open/ Unrestricted opportunity is due for release around June 2026, with an estimated award timeframe of September 2026. Continue to monitor SAM.gov for any updates on this opportunity.

Education (K-12)

Contact John: [email protected]

Approaching the education market using a capture methodology requires adapting federal, state, and local capture practices to the sector’s often-decentralized, relationship-driven nature. Key adaptations to consider include:

  • Shorter, more efficient procurement cycles

  • Heavy relationship-driven dynamics

  • Importance of political and budgetary cycles

  • Focus on cost efficiency and local impact

  • Greater reliance on cooperative purchasing agreements and state contract vehicles

Positioning and Shaping are vital in the education market to establish a market presence and influence opportunities early. The following activities can achieve this:

  • Analyzing budgets, procurement cycles, and spending patterns

  • Mapping out the competitive landscape and key contract vehicles within the respective state

Stakeholder Engagement and Relationship Building with procurement officers, school district leaders, and key influencers are important, but understanding the school district's decision-making process and political drivers is paramount. Attendance at industry days/events, government procurement, and SLED-specific conferences (e.g., EDUCAUSE, NASCIO, State IT, and Innovation Symposiums) is a focus for engaging stakeholders and building relationships.

Capture Planning will help secure your organization's competitive positioning. Completing a competitive assessment will help identify incumbents and assess their strengths and weaknesses. It will also help identify gaps in the market where competitors are underperforming, allowing your organization to capitalize on them or position its products and/or services accordingly.

Win Strategy Development will add value by developing tailored win themes focused on benefiting the school district, with emphasis on cost savings and technical advantages the district will receive. Incorporating socio-economic advantages into your efforts can help increase win probability (e.g., economic development, local hiring, accelerating small business partnerships, etc.).

How DCAA Approves Your System

Contact Dr. Tom: [email protected]

Previously, we discussed approved cost accounting systems and why they are required and important. The next logical question is: how does DCAA actually decide whether a system is acceptable? The short answer is SF 1408.

SF 1408 is the DCAA's gold standard for determining whether a contractor’s accounting system is adequate for a cost-reimbursement environment. If your system meets SF 1408 requirements, you are well positioned to pursue cost‑type contracts.

Design vs. Operation: A Key Distinction

One of the most important things to understand is that SF 1408 is a pre‑award survey, not a post‑award audit.

DCAA is evaluating the design of your accounting system, not how long it has been in use. You do not need years of historical data. Instead, you must demonstrate, through system configuration and written policies, that your accounting environment can perform the required functions.

Is It Really an Audit?

Although this review is often referred to as a “DCAA audit,” it is technically a survey.

That said, the distinction has become less meaningful over time. The DCAA checklist that maps to SF 1408 has grown more detailed, particularly around written policies and procedures. In practice, your accounting manual now carries just as much weight as the accounting software itself.

The Rise of Third-party Certifications

A notable trend in 2025–2026 is the increased acceptance of third‑party CPA certifications.

Many Government-wide Acquisition Contracts (GWACs), including Alliant 3, now allow—or, in some cases, require—qualified CPA firms to certify the adequacy of accounting systems when DCAA resources are unavailable. As a result, SF 1408 readiness is becoming important even when DCAA is not directly involved.

SF 1408 Checklist (Updated for 2026)

Below is a plain‑language overview of the core SF 1408 requirements and what DCAA is emphasizing today.

  • GAAP Compliance
    Your accounting system must follow Generally Accepted Accounting Principles (GAAP). This is the foundation of all federal cost accounting.

  • Direct vs. Indirect Costs
    The system must clearly distinguish direct project costs from indirect costs such as Overhead and G&A. A well‑defined, written Chart of Accounts is essential.

  • Unallowable Costs
    Costs unallowable under FAR 31.2 must be identified and excluded. Modern systems are expected to flag or segregate these costs automatically.

  • Labor Distribution 
    The system must support total time accounting, with labor charged to specific cost objectives. All hours worked must be recorded, including uncompensated overtime.

  • Monthly Posting
    Costs must be posted to the general ledger at least monthly. This supports timely monitoring and Limitation of Cost notifications.

  • Indirect Cost Allocation
    Indirect cost pools and allocation bases must be logical and applied consistently. The wrap rate methodology should be documented in a formal written policy.

  • Contract Line Item (CLIN) Tracking
    The system must be able to track costs at the CLIN and Sub‑CLIN level. There is increasing emphasis on detailed tracking for multi‑funded contracts.

  • Pre-production vs. Production Costs
    Pre‑production costs must be segregated from production costs. This is especially relevant for manufacturing and R&D contractors.

What Has Changed in 2026 (And What Has Not)

The SF 1408 criteria themselves remain unchanged. What has shifted is the regulatory and acquisition environment surrounding them, particularly under the 2026 NDAA.

Key Threshold Updates

• Full CAS Coverage now applies at $100 million (previously $50 million)
• CAS exemptions for contracts and subcontracts have moved toward $35 million
• The threshold for Certified Cost or Pricing Data is increasing from approximately $2 million to $10 million for prime contracts entered into after June 30, 2026

Increased Focus on Financial Capability

DCAA is placing greater emphasis on financial capability during pre‑award surveys. This includes evaluating whether a contractor has sufficient cash flow to cover costs before reimbursement is received.

Bottom Line

Confirmed: SF 1408 remains the standard for determining accounting system adequacy.

Updated: Higher CAS and pricing thresholds reduce administrative burden for many mid‑tier contractors.

Clarified: Written policies and procedures are now just as important as the accounting system itself.

About Hinz Consulting

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