GovCon Wednesday’s
A Guide for GovCons Focused on DCAA Compliance
Estimated Read Time: 8 minutes
Submitting your Provisional Billing Rate (PBR) isn’t the final compliance hurdle—it’s just the beginning.
Many government contractors make avoidable errors in their PBR submissions that lead to billing delays, audit complications, or even rejected invoices. These mistakes are often small like using outdated data or failing to document assumptions but they can have outsized impacts on cash flow and compliance.
In this installment of our 10-part indirect rate strategy series, we highlight the most common PBR mistakes we see across the GovCon landscape and how your business can stay clear of them.
1. Using Outdated or Inaccurate Cost Data
PBRs must reflect current-year indirect cost projections. But some contractors rely on last year’s data or apply flat percentage increases without analyzing current trends.
➡️ Fix: Update your cost pool estimates based on actuals from the current fiscal year (or the most recent six months), adjusted for known changes in staffing, leases, or other indirect drivers.
2. Failing to Exclude Unallowable Costs
According to FAR 31 and 42.704, unallowable costs—such as certain legal fees, advertising, or lobbying—cannot be included in your rate base or pools. Submitting a PBR that includes these expenses could lead to disallowed costs during an audit.
➡️ Fix: Scrub your general ledger and cost pools thoroughly to ensure unallowable expenses are excluded and segregated.
3. Missing Documentation for Assumptions
If you submit a billing rate without explaining how it was calculated or how future costs were estimated your auditor may question the submission or delay approval.
➡️ Fix: Include a narrative or spreadsheet showing your assumptions, cost build-up, and methodology. This shows transparency and readiness.
4. Submitting Late (or Not at All)
FAR 42.704 requires contractors to submit provisional billing rates at the beginning of the fiscal year, or earlier if stated in the contract. Late submissions can trigger unnecessary oversight or delay payment cycles.
➡️ Fix: Build PBR submissions into your compliance calendar and assign internal deadlines well before the government’s required date.
5. Not Requesting Updates During the Year
Circumstances change indirect costs increase, staffing models shift, contracts expand. Yet many contractors fail to update their PBRs mid-year, leading to underbilling or overbilling.
➡️ Fix: If your projections are materially different from your original submission, contact your DCAA auditor or contracting officer to revise your rates. This is allowed under FAR 42.704(c) and helps align billing with reality.
Why These Mistakes Matter
Mistakes in your PBR can damage more than your cash flow they can weaken your credibility with DCAA and future contracting officers. Here’s how:
- Delayed reimbursement leads to liquidity issues
- Audit findings reduce competitiveness for future awards
- Missed updates result in year-end reconciliations that consume staff and resources
Avoiding these mistakes isn’t just about getting paid it’s about building a scalable, audit-ready financial infrastructure that supports your long-term growth.
What’s Next in the Series?
✅Part 1: Intro to PBR
✅ Part 2: Do I Need a PBR? And How Do I Get One Approved?
✅ Part 3: What Goes Into a PBR? Breaking Down the Numbers
✅ Part 4: How Do I Calculate My Provisional Billing Rate?
✅ Part 5: What Happens After I Submit My PBR?
✅ Part 6: Common PBR Mistakes – And How to Avoid Them
7️⃣Part 7: How PBRs Impact My Invoicing and Cash Flow
8️⃣Part 8: Year End ICS
9️⃣Part 9: Can I Update My PBR During the Year?
🔟Part 10: Are You Audit-Ready? Supporting Your PBR with Documentation
📌 Avoid costly billing mistakes before they happen.
VSINGH CPA reviews PBRs for accuracy, risk exposure, and DCAA readiness—so you don’t have to worry about what got missed.
Let’s build a rate strategy that pays off.
👉 Check out our YouTube Shorts: https://youtube.com/shorts/AU18uKfmP64?si=hd2UsipnW4Wz2oby