Benefits

Know what you can charge

Fine-tune decisioning with help interpreting your award, procurements, and clause flowdowns to understand sourcing limitations and recoverable costs.

  • Decision tree diagrams
  • FAR flowdown interpretation
  • Compliance flow charts
  • Customized training material

Source without surprises

Assess Buy American Act (BAA), Trade Agreements Act (TAA), and tariff risks upfront so your sourcing strategy aligns with compliance requirements and avoids downstream unallowable costs that impact project margin.

  • BAA, TAA, & other domestic sourcing assessments
  • Tariff assessment

Recover more dollars

Build defensible policies and procedures that strengthen your position for maximum cost recovery and align supplier practices to government expectations.

  • Policy & procedure development
  • Flowdown checklist templates

Make it show up in systems

Get validation that your ERP and accounting system reflect compliant transactions, verifying that what you charge, recover, and report aligns across systems and contracts.

  • Data analytics
  • Transaction validation

Related
success stories

Take a deeper dive and discover how we’ve helped clients with Supply Chain Compliance.

FAQs

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How do contract clause flowdowns affect what our company can charge and recover?

Every prime contract contains mandatory and discretionary clauses that flow down to subcontractors and suppliers, directly shaping cost allowability and allocability under FAR Part 31. When multiple supply chain restrictions apply, nuances in which sourcing requirements supersede others can materially change project costs and supply chain efficiency. When those clauses are misread or ignored, costs that appear recoverable are later disallowed during a DCAA audit, eroding contract profitability. Proper FAR flowdown interpretation requires mapping each clause to your procurement structure, identifying sourcing restrictions, and confirming that your indirect cost pools reflect only compliant charges. Contractors who conduct this analysis at award rather than at audit have a materially stronger position when defending incurred costs.

What compliance risks should we be assessing before finalizing our sourcing strategy?

Domestic and international sourcing decisions must be evaluated together against BAA and TAA threshold applicability, as the presence of international content can shift which requirements apply. Within international sourcing strategies, tariff and duty exposure are embedded cost drivers that can materially impact cost recoverability, pricing, and contract performance. The BAA establishes domestic source preferences for supplies acquired for use inside the United States, while the TAA governs acquisitions above specified thresholds and restricts sourcing to designated countries. Under FAR Part 25, non-compliant sourcing can trigger price adjustments, cure notices, or disallowances. With unprecedented evolving tariff conditions in 2025 and NDAA focus on supply chain illumination in 2025 and 2026, a structured upfront assessment of your supply chain against these frameworks protects both margin and contractual standing before purchase orders are placed.

How do we build supplier policies that hold up under government scrutiny?

Audit-defensible supplier policies require more than internal sign-off. They must demonstrate consistency with FAR Subpart 44.3 purchasing system requirements and align with DCMA CPSR standards. Effective policies address price or cost analysis documentation, subcontractor oversight, sole-source justification, and conflict of interest controls. When policies are poorly documented or disconnected from actual procurement behavior, DCMA reviewers identify the gap as a purchasing system deficiency, which can trigger withholding of contract payments. Policies developed with an understanding of how auditors evaluate evidence are structurally more defensible and support broader cost recovery objectives.

Why does system alignment matter for supply chain cost recovery?

Cost recovery is only as strong as the data trail supporting it. When your ERP system and accounting system record transactions inconsistently, or when subcontractor charges are coded outside your approved billing structure, the result is either overbilling exposure or missed recovery. DCAA’s incurred cost audit process relies heavily on transaction-level testing, meaning system outputs must reconcile with contract terms, indirect rate agreements, and CAS 418 cost allocation methodology where applicable. Transaction validation and data analytics performed proactively, rather than reactively during audit, give finance and compliance leadership the visibility needed to correct errors before they become findings.

How does supply chain compliance connect to our broader federal contracting obligations?

Supply chain compliance intersects directly with subcontract administration obligations under FAR Part 42. These obligations are shaped by CAS, NDAA supply‑chain restrictions that increase visibility into subcontractor and supplier sourcing, and, for defense contractors, CMMC 2.0 cybersecurity requirements that extend accountability into the supplier tier. A subcontractor who fails a CMMC Level 2 assessment can disrupt contract performance and trigger prime contractor liability. In 2026, contracting officers are increasingly treating supplier networks as an integrated compliance environment. Contractors who manage these intersections proactively, across sourcing, billing, and cybersecurity, reduce audit exposure and protect performance across the full contract lifecycle.

What should we know about supply chain compliance when evaluating an acquisition or preparing for one?

In a government contracts M&A transaction, supply chain compliance is among the most frequently underweighted risk areas in due diligence. Acquiring entities inherit existing flowdown obligations, purchasing system deficiencies, BAA and TAA non-compliance, and unresolved cost disallowances tied to supplier transactions. These liabilities are rarely visible on a balance sheet but can materially affect contract novation approvals, forward pricing positions, and post-close audit exposure under FAR Part 42.12. Sellers preparing for an exit benefit equally from a structured compliance review, as a clean supply chain posture strengthens valuation, accelerates government consent, and reduces indemnification risk during negotiations.

Turn unclear flowdowns into recovered revenue

Get clarified sourcing rules and aligned systems to recover more cost and reduce compliance risk across your supplier network.

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