Well-documented written policies and procedures are a critical element of maintaining your company’s ability to continue winning government contracts.

Several contract clauses require procedural documents for internal control systems related to such activities as making estimates and purchases. In addition, contractors must have policies, procedures, operating instructions and other control information available to help ensure employees comply with other contract terms and expectations. Federal auditors will evaluate your enterprise’s internal controls and set the scope for future audits related to forward pricing and billing.

Contract clauses, terms of solicitations and other sources are the primary drivers of what your company should include in its policies and procedures. Examples include:

  • Clauses that require performance and execution of specific activities and mandate an internal control infrastructure.
  • Other contract provisions that list required control objectives and procedures.
  • Standard programs and guidance that are used by government auditors, analysts, and other oversight officials and that identify both required and expected control objectives and processes.

While employees must have up to date guidance on how to perform their jobs in compliance with contract terms, there is no pre-established format or media for documenting business practices. Your organization can use hard or soft copy and the information can be contained in multiple documents

The key is that the policies and procedures must be clearly communicated to the employees who are responsible for carrying them out. One of the steps of an internal control audit is verifying that staff members are aware of the information and have ready access to it.

Bottom line: Your organization’s written guides and instructions should have enough detail and depth so that when they are carefully followed the results will comply with all contract terms and expectations.

Tips for Creating Policies & Procedures

  • Obtain the guidance used by your oversight officials to identify their expectations and help you compile your firm’s policies and procedures.
  • Have employees acknowledge in writing that they are aware the policies exist and have ready access to them.
  • Evaluate your written policies and procedures at least once a year to ensure they are current and complete.

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