Management System Regarding Compliance with SF 1408

Management Statement Regarding Compliance with Standard Form 1408, Preaward Survey of Prospective Contractor—Accounting System

We, as members of management of ABC, Inc. (the Company) are responsible for complying with the requirements of Federal Acquisition Regulation (FAR), and related agency supplemental regulations. In order to be compliant with FAR we must have an adequate Business Systems to handle the appropriate contract types to which we are awarded. We have previously provided a DCAA letter, ensuring compliance with Time and Material and Labor Hour contracts, and submit this letter, with details, to show that our Accounting and Business Systems are also compliant for cost type contracts.

We utilized FAR Part 9.106-4 Standard Form (SF) 1408, the common pre-award survey utilized by DCAA to assist in conveying that our system is adequate. We have performed an evaluation of the Company's compliance with FAR Part 9.106-4 SF 1408 as of May 15, 2013. Based on this evaluation, we assert that the Company was in compliance with FAR Part 9.106-4 SF 1408 as described below:

FAR Part 9.106-4 SF 1408 requires the accounting system provide for:

1. In accordance with generally accepted accounting principles (GAAP)

2. Proper segregation of costs

3. Identification and accumulation of direct costs by contract

4. A logical and consistent method for allocation of indirect costs to intermediate and final cost objectives. (A contract is final cost objective)

5. Accumulation of costs under general ledger control

6. A timekeeping system that identifies employees’ labor by intermediate or final cost objectives

7. A labor distribution system that charges direct and indirect labor to appropriate cost objectives

8. Interim (at least monthly) determination of costs charged to a contract through routine posting of books of account

9. Exclusion from costs charged to government contracts of amounts which are not allowable in terms of FAR 31, Contract Cost Principles and Procedures, or other contract provisions.

10. Identification of costs by contract line item and by units (as if each unit or line item were a separate contract) if required by the proposed contract.

11. Segregation of preproduction costs from production costs.

FAR Part 9.106-4 SF 1408 requires the accounting system provide for financial information:

1. Required by contract clauses concerning limitation of cost (FAR 52.232-20 and 21) or limitation on payments (FAR 52.216-16)

2. Required to support requests for progress payments

FAR Part 9.106-4 SF 1408 also requires the following:

1. Accounting records are maintained in such a manner that adequate, reliable data are developed for use in pricing follow-on acquisitions

2. Determination if accounting system is currently in full operation.

Your requirements letter, “Proof of Accounting Billing Systems Adequacy” was written to direct compliance in accordance with FAR Parts 30 and 31. In terms of FAR Part 30, we provide assurance with are in compliance with The Cost Accounting Standards. We have provided a Disclosure Statement to our DCAA and DCMA offices, and are compliant with all 19 standards. We comply with FAR 31 – Cost Principles, and do not claim unallowable expenses, as noted on item 9 above, and which also is a requirement of CAS 405 – Accounting for Unallowable Costs. Our compliance with FAR is not limited to these areas, as contract clauses under cost type contracts add additional requirements. For example the allowable cost and payment clauses requires the submittal of an annual incurred cost submission, under FAR 42 – Contract Administration. We are current on our Incurred Cost Submissions, and all FAR requirements.

We have enclosed a completed SF-1408, section II. We have also provided a short narrative of our accounting system, and would be happy to discuss any aspect of our Accounting and Billing System.

ABC, Inc

By:

John Doe Date