As Small Satellite (SmallSat) companies grow and pursue government contracts, they face an increasing need to meet strict compliance standards, particularly those set by the Defense Contract Audit Agency (DCAA) and outlined in the Federal Acquisition Regulation (FAR). Navigating these requirements can be complex, especially for organizations still relying on disconnected systems or manual processes.

A modern, cloud-based Enterprise Resource Planning (ERP) system—like Acumatica—can provide the infrastructure needed to streamline compliance, reduce audit risk, and remain contract-ready.

Contrary to popular belief, the DCAA does not certify or endorse any specific ERP system. What they care about is whether your system and internal processes produce complete, accurate, and auditable financial data. So while you won’t earn a gold star from DCAA for your software choice, you can earn one for being organized.

Why Compliance Matters in the Space Industry

For SmallSat companies working with agencies like NASA, the Department of Defense (DoD), or other federal entities, maintaining compliance isn’t optional. It’s essential for:

• Winning and retaining contracts
• Avoiding penalties or disallowances
• Ensuring transparency and trust with auditors

DCAA and FAR guidelines touch every part of a company’s operations, from time tracking and cost allocation to invoicing and indirect rate calculations.

How ERP Helps Ensure Compliance

A purpose-built ERP system can simplify the path to compliance by integrating core functions into one platform and automating much of the reporting and tracking required.

Accurate Labor and Time Tracking

• Track direct and indirect labor by employee, task, and project
• Enforce daily time entry policies and electronic signatures
• Automate supervisor review and approval workflows
• Generate labor distribution reports by contract and funding source
• Maintain historical records for audit trails, including edits and corrections

Segregation of Costs

• Automatically separate direct, indirect, and unallowable costs at the transaction level
• Apply fringe, overhead, G&A, and material handling rates based on defined cost pools
• Map expenses to appropriate general ledger accounts with validation rules
• Produce compliant incurred cost submissions (ICS) for DCAA audits
• Track and report provisional billing rates vs. actual costs

Contract and Billing Controls

• Configure rules for various contract types (e.g., CPFF, T&M, FFP)
• Set billing ceilings and funding limits with alerts when thresholds are met
• Automate invoice generation by funding source and CLIN (Contract Line Item Number)
• Generate supporting schedules, such as labor category summaries and indirect rate applications
• Enforce billing cycles and submission workflows to reduce manual errors

Audit Trail and Documentation

• Maintain full audit trails of financial and operational transactions across the ERP
• Log all changes to critical records with user, timestamp, and reason for change
• Centralize document management with contract files, approvals, and communications
• Automate retention policies to meet federal requirements for recordkeeping
• Enable real-time access to audit-ready reports by project, funding source, or transaction type

A More Demanding Environment Requires Better Tools

As competition for government contracts increases and compliance standards evolve, SmallSat companies—regardless of maturity—must demonstrate operational transparency and financial discipline. Whether entering the defense market for the first time or scaling existing government programs, having the right infrastructure in place is critical.

A modern ERP solution like Acumatica—with flexible project accounting, robust cost tracking, and customizable workflows—can help SmallSat firms not only meet regulatory requirements but also position themselves as credible, capable partners in the broader aerospace and defense ecosystem.

And hey, if you’re ever feeling overwhelmed trying to track project costs, manage contracts, and stay compliant—just remember even satellites need ground control.