The contract terms are the operating model.

“The provisional rate was set in 2021 and nobody has looked at it since.”

In federal work the cost you can recover is defined before the work starts, and the controls that prove it are audited afterwards. Money is lost in the space between the rate you negotiated and the cost you can actually substantiate.

indirect rate
provisional billing rate
unallowable cost
flow-down
DCAA
CUI
firm fixed price
cost plus
task order

Your words, not ours.

Where it concentrates here

Five places the money tends to go in government contracting. Each one is concentrated — a single agreement, a single queue, a single account nobody reviews — which is why sampling walks straight past them.

Indirect rates under-recovered because the provisional rate was set conservatively and never revisited against actual.
Timekeeping practice that would not survive an audit, which is the single most common adverse finding and the easiest to fix in advance.
Flow-down clauses accepted from the prime and never passed to subcontractors, leaving the obligation without the protection.
Unallowable cost mixed into pools and stripped only at year end, if at all.
CUI handled on systems never assessed against NIST SP 800-171, discovered during a supplier assessment rather than before one.

Not every government contracting is the same business

Professional and technical servicesBilling governed by the contract labor category rather than by what the person costs, so a qualified substitution can be unbillable.
Cost-reimbursable and CPFF programsProvisional rates billed all year and trued up in an incurred cost submission prepared months after anyone could act on what it says.
Firm fixed price and commercial itemsPriced off a rate structure that has since moved, with the difference showing up as margin erosion nobody attributes to the rates.
Small business and set-aside contractorsSize standards, affiliation and the limitations on subcontracting — an eligibility question that is also a costing question.
State, local and educationDifferent rules in every state, cooperative purchasing vehicles, and a prime who is frequently another contractor with their own flow-downs.
Grants and cooperative agreementsUniform Guidance rather than the FAR, which changes what is allowable and who audits it, on work that looks identical from the delivery side.

Where this data actually lives

Deltek Costpoint in established contractors; Unanet GovCon, JAMIS Prime or PROCAS below that — and QuickBooks with a homemade job-cost layer at the small end, which is where accounting system adequacy questions begin
A timekeeping product with a daily audit trail — labor is the account an auditor opens first, and the trail is the control being tested
SAM.gov, SPRS and eSRS holding the government's version of your record, which primes read before they read yours
PIEE/WAWF for invoicing and receiving reports, where a rejected invoice is a cash event rather than a clerical one
A contracts folder on SharePoint or a shared drive that is the only place the mods and the flow-downs actually live
A capture pipeline in GovWin or a spreadsheet, disconnected from the resource plan that would have to deliver it

Named because it changes what the intake asks for. An extract from one of these has known gaps, and the review is built around them rather than surprised by them.

Reported in your numbers, not ours

indirect rate variance, provisional against actual
wrap rate
unbilled receivables and unliquidated obligations
fee capture on cost-type work
direct labor utilization
bid and proposal cost per win
funded and unfunded backlog
contract closeout backlog

The obligations that set the deadlines

The incurred cost submission — adequate as filed, or the year stays open and the fee stays unreleased
Provisional billing rate submissions, and the true-up when actual rates land
DFARS business system adequacy — accounting, estimating, purchasing — and the payment withholds that follow a determination of inadequate
Certified cost or pricing data where the threshold is crossed, and the defective pricing exposure it creates for years afterwards
Subcontracting plan reporting through eSRS on any plan-bearing contract
The SPRS score and the NIST SP 800-171 assessment behind it, and CMMC as it phases into solicitations
Service Contract Act wage determinations and conformances; Davis-Bacon and the health and welfare fringe on construction work

What the review would ask you for

6 requests written for government contracting and asked of nobody else — 2 of them core. They sit alongside the operating spine every business has — finance, revenue, receivables, payables, contracts, people, IT, operations, risk, commercial and governance — which is 107 further requests.

Contract vehicles and task orders Core With type: firm fixed price, cost plus, T&M.
Approved indirect rates and provisional billing rates Core
Timekeeping and labor charging practice The control most often found wanting on audit.
Audit history DCAA or equivalent, with findings and responses.
Flow-down clauses to subcontractors Including anything you are obliged to pass on but have not.
Controlled unclassified information handling Where CUI sits, who can reach it, and the system security plan covering it.

Anything you do not have can be skipped in one click, with a reason. The intake is completed in the client portal, which saves each answer as it is given and can be returned to as often as you like.

When this stops being interesting and becomes urgent

A DCAA audit notice, or a questioned cost carried over from the last one
An incurred cost submission returned as inadequate, which stops closeout
A CMMC or supplier assessment date attached to a re-compete
A re-compete lost on price with no cost model that explains why
A novation, an acquisition or a protest, where the rate structure is read by someone whose job is to find fault with it
An unbillable arising because a person's labor category did not match the contract

Who this involves

Signs it: President or CFO
Resists it: Program managers, whose labor charging and rate assumptions become visible
Has been asking for it: The contracts manager and the controller, who have been reconciling by exception

Who commissions it

CFOs, contracts directors and compliance leads. Phase one is priced before phase two is discussed, the report is yours either way, and we take no vendor commissions or referral fees on anything we recommend.

See the proposal and the price Talk it through first

The proposal sets out the sequence week by week, what we would need from you, and what it costs for your number of operating units. No call required to see the number.

Closest to this

Operations that share more with government contracting than the sector label suggests.