How to Select the Best ERP for Government Contractors

Balance compliance and functionality

Government contractors have a unique set of requirements for their business systems, and that includes ERP. This article focuses specifically on ERP for government contractors that do production and service. Manufacturing-centric requirements will be part of any ERP evaluation, but the priority for those in the defense industrial base is to ensure the system provides an infrastructure for meeting Cybersecurity Maturity Model Certification (CMMC) 2.0 compliancy and other government requirements.

Government regulation in this area impacts many companies. Direct contractors with the DoD and those aligned with a prime contractor due to contract flow down. Regardless, all those involved in producing component parts, sub-assemblies, major assemblies, and services need to ensure CMMC 2.0 requirements are met, or they could be in jeopardy of losing the ability to perform any government contract-related work.

The Department of Defense (DoD) estimates that around 76,000 companies will need to get an audit from a CMMC third-party assessment organization (C3PAO). Due to the small number of C3PAOs, business owners need to proactively put themselves in a favorable position to be able to pass these oncoming audits, or risk losing contracts.

Simply put, not being able to meet CMMC 2.0 requirements and/or being able to pass Defense Contract Audit Agency (DCAA) audits and meet quality requirements are death knells for these businesses. This applies to ERP for government contractors and every other system they use.

There are three assessment levels in CMMC 2.0 that may apply to contractors, requiring progressively higher numbers of security controls to protect progressively more sensitive data.

ERP for government contractors: three assessment levels in CMMC 2.0

Most manufacturers will fall in the Level 1 or Level 2 requirements. However, the need for third-party assessment versus self-assessment is to be expected for Levels 2 and 3.

ERP for government contractors: Important selection criteria

How you can more readily select the best government contractor ERP system is to look for the following criteria:

Government contractor ERP system in AWS or Microsoft Azure

Not all clouds are created equal. ERP evaluators need to know if the security measures are provided by AWS or Microsoft Azure Government versus a value added reseller (VAR). You also want to ensure that the ERP is on a singular cloud versus hybrid. We have seen some ERP companies have part of their solution on Azure Government Cloud while the quality component is on the Life Sciences cloud. These hybrids are not as compliant as a single provider, such a complete ERP on AWS Gov Cloud.

FedRAMP Authorized ERP

This is another first step to being able to pass audits more easily. There are very few manufacturing-focused ERP products available on the market that are FedRAMP Authorized. FedRAMP Mod certification will be adequate for most subprime contractors. However, FEDRAMP High may very well be needed for prime contractors.

Having an ERP available on Gov Cloud AND being FedRAMP authorized will allow your company to be well positioned to be able to pass a CMMC Level 2 audit.

Strong manufacturing functionality

The ERP system must still be able to meet your business requirements in regard to providing infrastructure to support manufacturing. Functional attributes typically prioritized include the following:

Project-based manufacturing and project costing:

Supports multiple contract types
Supports all projects efforts, including engineering/design, fabrication, outside resources, installation, training, service agreements, maintenance contracts, rentals, and warranty
Actual versus budgets
Percent complete revenue recognition
Estimate to complete
Estimate at complete
Supports work breakdown structures (wbs)
Microsoft Project integration
Actual costing and actual specific
Supports project warehouses

Engineering, manufacturing, and shop floor execution:

Track all engineering masters and drawings
CAD integration
Engineering change control
Advanced planning and scheduling for supply chain and production scheduling (backward finite, infinite scheduling)
Lot/serial trace for all material for industries including aerospace requirements
Shop floor control for tracking audits of labor activities, time, actual costs, material issues including trace, quality inspections, and material barcoding.

Quality Control System (QCS)

The QCS used by a government contract manufacturer should be part of the ERP due to both FedRAMP authorized on a single Gov Cloud. Additionally, the QCS should support both ISO and AS certified and complaint organizations

Service

An often-overlooked area of ERP for government contract manufacturers is service management. If your organization has field technicians providing remote service contract and maintenance services, then having integrated service management should be a fundamental part of the ERP. Often there are service components to a project, and these activities and costs need to be accounted for within the project structure.

Summary

Many of those evaluating ERP for government contractors find there are very few applications that meet both their manufacturing needs and federal requirements. The task gets a lot more daunting for SMB companies as the large SAP and Oracle ERP systems are overwhelming from usability and budget perspectives.

There is one highly ranked, manufacturing-focused ERP application that checks all the boxes, which is Infor CloudSuite Industrial. It is ranked in the highest tier of manufacturing ERPs for government contractors and is a FedRAMP authorized ERP available in the AWS Gov Cloud.

For a free consultation on how to evaluate ERP for government contractor manufacturers, please reach out for a free consultation. The team at Visual South will discuss options for improvement and how to address your business issues.