Guide · Time tracking
Government Contractor Time Tracking Software: DCAA Compliant Solutions
Government contracting demands the highest standards of time tracking accuracy. The Defense Contract Audit Agency (DCAA) can audit your timekeeping at any moment, and non-compliance can mean disallowed costs, contract termination, or worse. Your time tracking system isn't just about billing, it's about survival in the federal marketplace.
Why Government Contractors Need Specialized Time Tracking
DCAA compliance isn't optional, it's contractually required for cost-reimbursable and time-and-materials contracts. The Federal Acquisition Regulation (FAR) establishes requirements for contractor accounting systems, including timekeeping. Non-compliant systems put your contracts at risk and can result in significant financial penalties.
DCAA Audit Requirements
DCAA auditors evaluate timekeeping systems against specific criteria: daily recording of hours, supervisor approval, segregation of direct and indirect costs, labor distribution accuracy, and proper documentation of corrections. Your system must demonstrate compliance in each area, partial compliance isn't sufficient.
Contract Segregation
Employees working on multiple contracts must accurately charge time to each. Cross-charging, billing one contract for work performed on another, is a serious offense that can result in False Claims Act liability. Your system must make correct allocation easy and incorrect allocation difficult.
Labor Category Compliance
Contracts specify labor categories with defined qualifications and billing rates. A Senior Engineer billing at $180/hour can't charge the same rate for administrative tasks. Time tracking must capture both hours worked and the labor category performed, not just the employee's default classification.
Key Challenges for Government Contractors
Multi-Contract Environments
Many contractors work on dozens of active contracts simultaneously. Each contract has different Work Breakdown Structures (WBS), charge codes, and funding limitations. Employees must navigate this complexity daily, selecting the right contract, task, and labor category for each hour worked.
Incurred Cost Submission
Annual incurred cost submissions require detailed labor data by contract, CLIN, and indirect cost pool. Your timekeeping system must support this reporting without extensive manual manipulation. Data that's easy to capture but hard to report defeats the purpose.
Correction and Adjustment Tracking
DCAA scrutinizes timesheet corrections. Who made the change? When? Why? Was the original entry preserved? Your system must maintain a complete audit trail of all modifications, not just the current state, but the history of how it got there.
Subcontractor Time Management
Prime contractors often manage subcontractors whose time must also be compliant. While subcontractors maintain their own systems, you need visibility into their labor charges for billing accuracy and contract management. Integration or standardized reporting is essential.
DCAA Compliance Essentials
Daily Time Recording
DCAA requires that employees record time daily, as work is performed. Systems that allow backdating entries more than a day invite scrutiny. Some organizations lock timesheets after 24-48 hours, requiring supervisor approval for late entries.
Supervisor Approval Workflow
Timesheets must be reviewed and approved by a supervisor who can verify the work was performed. This isn't a rubber stamp, approvers must have sufficient knowledge to detect errors. Electronic approval with timestamps satisfies audit requirements.
Direct vs. Indirect Segregation
Your system must distinguish direct charges (to specific contracts) from indirect charges (overhead, G&A, B&P, IR&D). Misclassification distorts indirect rates and can result in overbilling. Clear charge code structures prevent confusion.
Floor Check Capability
DCAA auditors may perform floor checks, walking through your facility to verify that employees are working where their timesheets say they are. While your software can't prevent discrepancies, real-time visibility helps supervisors catch issues before auditors do.
Best Time Tracking Software for Government Contractors
Unanet
Unanet is purpose-built for government contractors. DCAA-compliant timekeeping, project accounting, and incurred cost submissions in one integrated platform. Widely adopted by mid-size contractors and recognized by auditors as a compliant system.
Best for: Government contractors needing fully integrated ERP with proven DCAA compliance.
Deltek Costpoint
Deltek Costpoint is the industry standard for large government contractors. Comprehensive timekeeping, labor distribution, and compliance reporting. Enterprise-scale solution with extensive customization and integration capabilities.
Best for: Large government contractors with complex multi-contract portfolios and compliance requirements.
Hour Timesheet
Hour Timesheet offers DCAA-compliant timekeeping at accessible price points for small contractors. Includes required features like daily time entry, supervisor approval, and audit trails without enterprise complexity or cost.
Best for: Small government contractors seeking affordable DCAA-compliant time tracking.
Malleable
Malleable provides one-tap timers that sit next to the calendar you already run your day on. While direct labor typically requires more structured systems, Malleable works well for BD, proposal, and administrative time that isn't billed directly to contracts: start a timer when you pick up that work and assign it to the right bucket.
Best for: Contractor executives and BD teams needing low-friction tracking for indirect time and internal meetings.
Implementation Best Practices
Document Your Policies
DCAA wants to see written timekeeping policies, not just a system. Document procedures for daily recording, correction processes, approval workflows, and employee responsibilities. Train every employee and maintain training records.
Conduct Internal Audits
Don't wait for DCAA to find problems. Regularly audit your own timekeeping, check for late entries, unusual patterns, missing approvals, and correction documentation. Fix issues proactively and document corrective actions.
Simplify Charge Code Structure
Complex charge code hierarchies lead to errors. Use clear naming conventions, logical groupings, and smart defaults. Make it easy for employees to find the right code, searching through 500 options guarantees mistakes.
Enforce Daily Entry
The single most important compliance practice is daily time recording. Use system controls, automatic reminders, lockouts for missing entries, escalation to supervisors. Build the habit from day one with new employees.
Related Articles
Simplify indirect time tracking.
For BD meetings, internal planning, and administrative work, start a one-tap timer in Malleable and assign it to the right bucket. Your tracked time sits next to the calendar you already run your day on, while structured systems handle direct contract charges.