For growing government contractors, “compliance” is a tricky arena. Stuck between the do-it-yourself and hope for the best model and the cost laden expertise of traditional accounting firms, growing, non-major (i.e. under $100M) government contractors often find it difficult to create a compliance strategy that aligns to their business needs and execute against it.
Here are a couple of tips for the c-suite and compliance managers trying to deal with this conundrum:
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Pull your corporate strategy documents off the shelf and blow off the dust. Start identifying the key areas of growth for your company over the next 12 months, three years, and even five years if possible. Document the categories of growth and the volume of growth for each year, 3 year and 5 year time frame.
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Consider the Federal regulatory, cost accounting and audit requirements that will change for each time period. If you don’t know, post some questions to Linked in groups… your bound to get free advice! Document the expanded compliance requirements that could be required for each year, three year and 5 year time period. Consider expansion of contract universe and contract type, volume of business, Federal agencies served, Prime/Subcontracts, TINA applicability, current audit exposure, accounting, procurement and estimating system requirements, products and services offered and whether they meet Part 12/13 exemption requirements, etc.
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PRIORITIZE the aforementioned requirements. I emphasize priorities because I can almost guarantee you won’t be able to implement all the improvements overnight. Consider your company’s risk tolerance when prioritizing. Are you risk averse? Aggressive? Moderate and somewhere in the middle? Your prioritization should align to your risk tolerance and your growth strategy. If the three are not in alignment, come back to your requirements list and re-priorities until you can meet both your business objectives and compliance objectives in a symbiotic manner.
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Create a Compliance Improvement Plan or Compliance Growth Strategy plan that aligns to your highest level, top priorities for each year, three year and five year period. Make your plan SMART (Specific, Measurable, Achievable, Realistic and Time driven). That means stating what you intend to accomplish, creating parameters against which you can measure if it is complete, and tying activity completion dates to the plan.
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Obtain stakeholder buy-in. Share the plan with your top level managers or the management suite that will be most affected. Setting the tone from the top is key to success. Establish a recurring calendar event so that you measure progress towards your goals every month. Hold people responsible for activities accountable.
Things happen during the course of business that occasionally alter our plans. Maintain a baseline of your compliance growth strategy plan and measure against it. Even if you don’t meet all of your objectives for year one by the end of the year, I guarantee you’ll have met some. Good Luck!
