How to Reduce Your Indirect Rates: 7 Strategies That Win More Government Contracts
Five points off your overhead rate on a $3M labor base is $150,000 a year. Most carry 10 to 30 points of excess from bookkeeping problems, not business problems.

Founder & Managing Consultant, Amerifusion Bookkeeping
Former KPMG financial auditor, former Senior Manager for IS Assurance and Third-Party Risk Management at BDO’s Dallas office (SOC 1/2, HITRUST, HIPAA), and former Senior Technology Risk Manager at Stryker. Joseph writes on DCAA-compliant accounting systems, FAR Part 31 cost allowability, and indirect rate strategy for government contractors.
Five points off your overhead rate on a $3M labor base is $150,000 a year. Most carry 10 to 30 points of excess from bookkeeping problems, not business problems.
Phase I runs on basic bookkeeping. Phase II demands DCAA-compliant accounting, daily timekeeping, documented indirect rates and a system that passes SF 1408. That leap catches most first-time awardees.
SBA suspended 1,091 firms in 2026 for failing to produce three years of records in 30 days. The ones who shipped inside 48 hours had a monthly workflow.
You filed the incurred cost submission on time. DCAA then has a defined process for adequacy review, audit selection and final rate settlement. Here is every step of it.
You won the contract. You now have 90 days to build an accounting system that survives a DCAA audit. Week by week, from chart of accounts to first reconciliation.
Straight answers on what DCAA bookkeeping costs in 2026, what drives the differences between quotes, and how to tell real value from a low headline rate with fees behind it.
Your bookkeeper records the transactions. A GovCon CPA defends them under audit. Where general bookkeeping stops being enough, and what the specialisation actually buys you on a contract.
How government shutdowns affect contractor payments, billing, and indirect rates. A CPA-guided financial playbook for payment delays.
Signs your government contracting business has outgrown QuickBooks. Compare QuickBooks vs Deltek, Unanet, and Procas for DCAA compliance.
Key FAR and DFARS class deviations in 2025-2026 that affect cost accounting, billing, and compliance for government contractors.
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