GovCon Systems Spotlight: If You’re Adding Workarounds, You’re Adding Risk
- jharper166
- 27 minutes ago
- 6 min read
You didn’t plan to run your business out of spreadsheets.
They just showed up. One to track indirect rates because QuickBooks couldn’t. Another to reconcile billing because the numbers didn’t quite line up. A third because leadership needed a report now, not after month-end close.
None of that means you’re doing anything wrong. It usually means you’re growing.
But in government contracting, growth has a habit of exposing system gaps long before it exposes people gaps. And when those gaps get filled with workarounds, risk starts to creep in quietly.
If you keep adding spreadsheets, offline trackers, or “shadow” tools because your current systems won’t reliably give you contract-level truth, you’re building dependency on manual labor instead of scalable infrastructure. Those workarounds quietly increase audit risk, slow decision-making, and obscure cost visibility. This isn’t a people problem, it’s a systems signal.
Growth Isn’t a People Problem — It’s a Systems Problem First
Here’s the thing: GovCon growth creates complexity faster than staffing can keep up with it. When contracts multiply, especially if you’re moving into cost-reimbursable work or multi-year task orders, the demands on your accounting and reporting systems increase exponentially.
Studies of finance teams across industries show this “manual stack” approach tends to break down when:
Reporting needs outpace system capabilities, prompting exports to spreadsheets because the system can’t produce the data you need in the format you need.
Month-end close processes stretch, requiring manual reconciliation across disconnected tools.
Leadership loses confidence in “whose numbers are right” because different teams are using different worksheets.
A recent 2026 survey of government contractor accounting challenges confirms these patterns: forecasting and financial visibility, contract profitability tracking, indirect rate management, and delayed month-end close due to fragmented environments are all common pain points as GovCons scale. These issues do not improve with growth unless the underlying systems do too. BlueStreet Inc.
Workarounds feel tactical. Over time they become strategic fragility.
Spreadsheets: Familiar, Powerful, and Error-Prone
Spreadsheets are everywhere in business. Everyone knows how to open one. Everyone knows how to tweak one.
Here’s the inconvenient truth: Research examining tens of thousands of spreadsheet cells found error rates, even among experienced users, hover between 0.8% and 1.8% per formula cell. That might sound small, but once you’re tracking thousands of formulas and references for cost pools, indirect rates, billing logic, and reconciliations, systemic error becomes virtually unavoidable. arXiv
The inefficiency isn’t just about errors, it’s about time. A broad workforce analysis shows that the typical office worker spends around three hours per week working in spreadsheets, and over 50% of work time is consumed by repetitive document tasks like updating spreadsheets rather than analyzing data. ProcessMaker
One case study estimated that manual spreadsheet reporting consumed roughly 480 hours annually for a $3M nonprofit just to prepare board reports. The total cost of that “spreadsheet tax” approached $128,000 per year in time, lost revenue, and turnover impacts. Medium
And the downstream effects matter: reliance on manual processes and spreadsheets has been linked to millions of dollars in hidden data quality costs per year in organizations due to slow decision-making, inconsistent data, and reactive workflows rather than proactive planning. Breadwinner
And those errors don’t stay isolated:
Mistakes in rate allocations can skew pricing decisions on new proposals.
Misstated costs can trigger audit findings months later.
Inconsistent labor cost distribution complicates compliance reviews under FAR and DFARS.
Humans make errors. Spreadsheets don’t warn you until someone digs deep, usually during audit or contract negotiations.
QuickBooks: Great for Early Stage, Not Built for GovCon Complexity
QuickBooks isn’t bad accounting software. It’s just not built for the unique demands of government contracting.
Federal auditors and GovCon specialists point out that QuickBooks lacks native support for segregation of direct and indirect costs, contract-level labor distribution, and DCAA-friendly audit trails. That’s why many small contractors mask its limitations with add-ons, custom reports, and offline reconciliation logic.
Those manual bridges work for a while, until they don’t. What feels efficient becomes brittle under volume, leading to:
Billing delays because you need to export, rekey, and cross-check data.
Third-party tools or plug-ins layered on top, none of which “talk” to each other.
Episodes where compliance reviews take longer because data doesn’t live in a consolidated source.
It’s not an indictment of QuickBooks. It’s a clear signal that the tool’s architecture wasn’t designed to be the foundation of compliance and complex reporting.
Compliance Isn’t Optional — It’s Foundational (and Tested Early)
One of the huge misconceptions is that DCAA compliance is something that you worry about after winning a big contract.
In reality, your accounting setup gets evaluated as part of pre-award readiness – particularly for cost-type work.
Agencies and auditors look for:
Segregation of direct and indirect costs
Accrual-based labor tracking mapped to contracts or work orders
Documented, auditable sequences from timesheets through ledger entries
Consistent application of cost objectives across contracts
That’s not opinion. It’s the test embedded in the SF 1408 Pre-Award Survey, the form used by DCAA to determine if your system is adequate. Cheryl Jefferson & Associates
There’s no magic badge that says “DCAA-approved software.” Compliance comes from process plus system. And if those two live partly in Excel, well, the auditor sees that too.
The Hidden Cost of Manual Processes
Nobody tracks “hours spent tidying spreadsheets” in the P&L, but it is real work that every finance team pays for.
Multiple workforce studies show that over 40% of employees spend at least a quarter of their workweek on manual, repetitive tasks like copying data between systems, reconciling reports, and fixing inconsistencies. For a small GovCon, that often translates to one or two people losing a full day every week just keeping the numbers aligned. That time doesn’t create insight. It just keeps operations from drifting apart. Smartsheet
The cost shows up less as a single dollar figure and more as daily friction:
Leadership hesitates because reports don’t fully agree
Invoicing slips while data is reconciled across tools
Finance teams stay reactive instead of planning ahead
Manual effort doesn’t scale linearly. Each new contract, CLIN, or reporting requirement adds more reconciliation, more checking, and more dependency on a few people who know where the spreadsheets live. Over time, the work compounds quietly, predictably, and expensively.
System Maturity Isn’t About Size, It’s About Complexity
A 10-person firm with one fixed-price contract may never need an ERP. A 10-person firm with multiple cost-reimbursable CLINs and monthly provisional billing definitely will.
The tipping point isn’t headcount, it’s contract complexity and the associated reporting demands.
Outdated systems tend to reveal themselves not when you feel failure, but when:
You start exporting data just to see the numbers clearly.
Multiple versions of “the report” circulate internally.
Month-end close extends into the second or third week.
Billing waits on manual reconciliation instead of process flow.
These are all early warning signs – not emergencies – but indicators that your growth engine is being held back by legacy infrastructure.
Modern ERP: Scalable, Integrated, and Real-Time
Enterprise Resource Planning systems purpose-built for government contractors integrate financials, contracts, HR, timekeeping, compliance controls, and reporting into one consistent source of truth.
ERPs can eliminate many of the pain points that lead to workarounds:
Real-time visibility into contracts and costs
Consistent allocation of indirect rates
Automated billing and labor cost distribution
Built-in controls that mirror compliance expectations
Centralized data that eliminates manual reconciliation loops
That doesn’t mean ERP is the only path for everyone. But when workarounds begin to outnumber system reports, you’re already paying the price of manual infrastructure, you just don’t see the bill yet.
Growth Should Be a Signal, Not a Surprise
If your team reaches for a spreadsheet first instead of a system report, that’s not “innovation.” It’s a signal. A healthy one, if acknowledged early.
In GovCon, risk doesn’t usually shout. It whispers:
“I thought the general ledger had this.”
“Why does this report look different than that one?”
“We need a reconciliation run before billing every month.”
When those whispers become daily conversations, that’s when systems need to grow, not people.
Workarounds buy time. Scalable systems buy certainty.
Let's Talk
If workarounds have crept into your core operations, it’s worth stepping back and asking: Are our systems keeping pace with our contracts? If they’re not, you’re not behind, you’re signaling readiness for the next stage of growth.
CRI helps contractors stabilize operations and prepare the systems foundation that supports sustainable scaling — before workarounds become liabilities.
Amber Fewell
Senior Account Manager
(703) 848-7931
