Contracting with the U.S Federal government comes with a set of criteria that are not common in the business world. To qualify for the federal acquisition process and retain their status, government contractors must follow tighter requirements and regulations.
The Federal Acquisition Regulations and the Defense Contract Audit Agency’s standards both have timekeeping requirements. Because labor is the single biggest cost driver and has a significant impact on the project’s total cost, they discuss both manual and digital approaches for tracking labor use on a government contract.
Manual Timekeeping Requirements
Despite the growing use of digital means, the federal government’s timekeeping standards are still heavily focused on manual methods. For example, employees physically recording the time logged on the job in writing is still one of the authorized manual timekeeping procedures required by the federal government for organizations seeking to contract with it.
Supervisors and administrators are not permitted to fill timesheets on behalf of employees unless there are valid reasons to do so, such as when an employee is unwell or on duty. It is the employee’s responsibility to ensure that his timesheet is correctly filled out. Additionally, before the document can be submitted for payment, the supervisor must countersign and approve the information.
Electronic Timekeeping Requirements
Companies that want to bid on government contracts must demonstrate that they have effective internal control policies, especially if they use electronic timekeeping systems.
Personnel should use secure password protections to access their timesheets and keep direct control over their timesheets to prevent unapproved modifications. They must then record all the hours they have worked on a daily basis, whether or not they have been paid, but they must not record or bill for labor prior to working.
During audits, the DCAA will typically want to look at the system logs to verify who has accessed the system and why they have done so. In addition, if an error occurred, the audit would investigate how it was addressed.
Written Policy Requirements
Government contractors must have thoroughly documented timekeeping plans that demonstrate their procedures and adherence to federal government regulations. In addition, the organization must have written policies in place for timesheet generation and documentation of how personnel are instructed on how to use them.
Companies must have documented procedures in place regarding time charge codes, which are the codes that employees use to mark the time that will be billed for a given government contract and are used to calculate the project’s overall labor cost. In addition, the company should be able to show evidence of periodic audits or inspections.
Failure to Comply
Companies that fail to comply with federal timekeeping laws and requirements and fall short of the required standards are barred from working as government contractors.
The False Claims Act makes falsifying time sheets a criminal offense. Employees who do so face criminal charges and the company is forbidden from bidding on federal contracts. Additionally, government contractors who use deceptive labor billing schemes expose themselves to criminal accountability and imprisonment. Furthermore, under the Act, all fraudulent parties are liable to civil procedures, which carry fines, imprisonment, and penalties of up to three times the amount of money misappropriated from the federal government through fraudulent payments.
To discuss your company’s government contract timekeeping and payroll needs or receive a free quote, give us a call at 505-944-0105. We consider ourselves to be the best payroll processor in Albuquerque, NM, New Mexico and the Southwest. We look forward to serving all your government contract timekeeping and payroll processing needs.