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Cost Estimating System Requirements

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DFARS Compliance: Essential Cost Estimating System Requirements

In the realm of government contracting, complying with DFARS 252.215-7002 is pivotal for an acceptable cost estimating system. This clause outlines crucial criteria, ensuring your cost estimating system is maintained, reliable, and consistently applied. Here's a breakdown of the key requirements:

Understanding an Acceptable Estimating System

An acceptable cost estimating system is characterized by compliance with the criteria outlined in DFARS 252.215-7002, ensuring:

  • Maintenance, reliability, and consistent application.
  • Production of verifiable, documented, and timely cost estimates.
  • Integration with related management systems.
  • Adherence to applicable financial control systems.

Criteria for an Acceptable Estimating System

To be deemed acceptable, an estimating system must fulfill 17 criteria, including:

  1. Establish clear responsibility for preparation, review, and approval of cost estimates and budgets.
  2. Provide a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates and budgets.
  3. Ensure that relevant personnel have sufficient training, experience, and guidance to perform estimating and budgeting tasks in accordance with the Contractor’s established procedures.
  4. Identify and document the sources of data and the estimating methods and rationale used in developing cost estimates and budgets.
  5. Provide for adequate supervision throughout the estimating and budgeting process.
  6. Provide for consistent application of estimating and budgeting techniques.
  7. Provide for detection and timely correction of errors.
  8. Protect against cost duplication and omissions.
  9. Provide for the use of historical experience, including historical vendor pricing data, where appropriate.
  10. Require use of appropriate analytical methods.
  11. Integrate data and information available from other management systems.
  12. Require management review, including verification of compliance with the company’s estimating and budgeting policies, procedures, and practices.
  13. Provide for internal review of, and accountability for, the acceptability of the estimating system, including the budgetary data supporting indirect cost estimates and comparisons of projected results to actual results, and an analysis of any differences.
  14. Provide procedures to update cost estimates and notify the Contracting Officer in a timely manner throughout the negotiation process.
  15. Provide procedures that ensure subcontract prices are reasonable based on a documented review and analysis provided with the prime proposal, when practicable.
  16. Provide estimating and budgeting practices that consistently generate sound proposals that are compliant with the provisions of the solicitation and are adequate to serve as a basis to reach a fair and reasonable price.
  17. Have an adequate system description, including policies, procedures, and estimating and budgeting practices, which comply with the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement.

DCAA Guidance on Compliance

The Defense Contract Audit Agency (DCAA) plays a crucial role in evaluating compliance. Any significant deficiencies identified should be addressed promptly, with the Contracting Officer providing written determinations. Corrective action plans must be submitted within 45 days if deficiencies persist.

While no accounting software guarantees DCAA compliance, systems like JAMIS Prime are designed to make the audit process less daunting. To learn more about how JAMIS Prime can benefit your business, contact us at info@jamis.com or sign up for a complimentary demo HERE.