ERP Software for Defense
Defense contractors and military agencies operate under some of the most demanding compliance and security frameworks in the world, including FAR, DFARS, DCAA audit requirements, ITAR export controls, and CMMC cybersecurity standards. ERP systems for the defense sector must provide precise cost accounting by contract, program, and CLIN, support government property management, and deliver the audit trails required for incurred cost submissions and DCAA floor checks. Whether you are a prime integrator managing a $10 billion program or a Tier 2 supplier seeking DCAA compliance, the right ERP platform is foundational to contract profitability and award retention.
Compare ERP Systems for Defense
Select up to 4 ERP vendors to compare side by side. Filtered to show systems with strong defense capabilities.
Key Challenges for Defense
Maintaining FAR Part 31 and DFARS cost accounting compliance across cost-plus, fixed-price, and time-and-materials contract types with separate indirect cost pools
Passing DCAA (Defense Contract Audit Agency) incurred cost audits and floor checks requiring complete labor, material, subcontract, and overhead cost documentation at the contract and CLIN level
Managing ITAR (International Traffic in Arms Regulations) and EAR export control requirements for systems used across multinational programs and supply chain partners
Complying with CMMC (Cybersecurity Maturity Model Certification) Level 2 or Level 3 requirements for ERP systems handling Controlled Unclassified Information (CUI)
Tracking and accounting for government-furnished property (GFP) and government-furnished equipment (GFE) across multiple contracts and physical locations
Executing earned value management (EVM) reporting under ANSI/EIA-748 for EVMS-required contracts, integrating cost and schedule performance data
Managing program and project accounting across multi-year, multi-award contracts with complex funding profiles, undefinitized contract actions (UCAs), and contract modifications
Best Defense ERP for SMBs
Recommended for companies with $10M–$250M revenue and 10–200 employees.
Deltek Costpoint
mid-rangeThe market-leading ERP specifically designed for government contractors, with native DCAA compliance, project-based cost accounting, labor distribution, and incurred cost submission support used by thousands of defense firms.
Best for: Small to mid-size defense contractors requiring DCAA compliance
Unanet A/E (GovCon Edition)
mid-rangeCloud ERP for government contractors with project accounting, time and expense management, DCAA-compliant timekeeping, and CRM designed for small to mid-size prime and subcontractors.
Best for: Small defense contractors and professional services firms
Jamis Prime ERP
mid-rangeCloud-native government contractor ERP with DCAA compliance, project accounting, procurement, and financial management, offering a modern alternative to legacy Deltek deployments.
Best for: Small to mid-size government contractors seeking cloud deployment
Acumatica Government Contractor Edition
mid-rangeCloud ERP with government contractor module providing project accounting, DCAA-compliant timekeeping, and FAR-compliant indirect cost pool management for smaller firms.
Best for: Small defense subcontractors and service providers
SYMPAQ SQL
budgetSpecialized accounting system for small defense contractors with DCAA compliance, project cost accounting, and billings management supporting FAR and DFARS requirements.
Best for: Small defense contractors under $50M revenue
QuickBooks with GovCon Add-ons
budgetEntry-level option for very small defense subcontractors using QuickBooks with PROCAS, Advantage365, or similar DCAA-compliant add-on modules to meet basic timekeeping and cost segregation requirements.
Best for: Very small defense subcontractors under $5M revenue
Best Defense ERP for Enterprise
Recommended for companies with $250M+ revenue and complex multi-site operations.
SAP S/4HANA Defense & Security
enterprisePurpose-built defense ERP with contract lifecycle management, earned value management, government property management, ITAR access controls, and multi-program financial consolidation for large prime integrators.
Best for: Large defense prime integrators and military agencies
Oracle ERP Cloud (Defense)
enterpriseEnterprise cloud ERP deployed on Oracle Government Cloud with IL4/IL5 authorization, project accounting, government procurement compliance, and integration with defense logistics systems.
Best for: Large defense contractors and military agencies requiring IL4/IL5 cloud
Microsoft Dynamics 365 (GCC High)
enterpriseFedRAMP High and IL4-authorized Dynamics 365 deployed on Azure Government Secret cloud, offering defense contractors a familiar Microsoft platform with ITAR-boundary-compliant data segregation.
Best for: Defense contractors handling CUI and ITAR-controlled data
Workday Government
enterpriseUnified HCM and financial ERP with FedRAMP Moderate authorization and strong workforce management for defense agencies managing large civilian and contractor workforces.
Best for: Defense agencies prioritizing unified workforce and financial management
Essential ERP Capabilities for Defense
FAR Part 31 and DFARS-compliant cost accounting with separate direct and indirect cost pools, base allocation methodologies, and forward pricing rate proposal (FPRP) support
DCAA-compliant electronic timekeeping with labor distribution by contract, CLIN, and task order, supporting floor check readiness and incurred cost submission preparation
Contract lifecycle management covering funded CLINs, undefinitized contract actions (UCAs), contract modifications, and multi-year funding profiles
Earned value management (EVM) with BCWS, BCWP, and ACWP tracking, variance analysis, and ANSI/EIA-748 compliant performance measurement baseline (PMB) management
Government-furnished property (GFP) and government-furnished equipment (GFE) inventory tracking with location, condition, and disposition reporting
ITAR and EAR export control access management restricting system data access based on nationality and program authorization
CMMC-aligned cybersecurity controls for ERP systems handling Controlled Unclassified Information (CUI) including multi-factor authentication and audit log retention
Subcontract management with flow-down clause tracking, consent to subcontract workflows, and subcontractor progress payment administration
Defense-specific procurement with SAM.gov integration, JAM (Joint Automated Management) compatibility, and military specification compliance tracking
Program office financial reporting with contract funding status, obligations versus expenditures, and program baseline variance dashboards
Defense ERP Cost Ranges
SMB
$40,000–$200,000
10–50 users
Implementation: $60,000–$350,000
Mid-Market
$150,000–$750,000
50–300 users
Implementation: $300,000–$2,000,000
Enterprise
$700,000–$10,000,000+
300+ users
Implementation: $2,000,000–$30,000,000+
Implementation Considerations
DCAA compliance must be validated before the system goes live — DCAA pre-award surveys assess whether the accounting system is adequate to accumulate costs by contract, and a failed survey can disqualify the company from cost-reimbursable contracts.
CMMC Level 2 or Level 3 certification requirements may mandate that the ERP system and its hosting environment undergo independent third-party assessment (C3PAO assessment), which must be planned well in advance of contract award deadlines.
Classification and CUI data segregation requirements may necessitate separate ERP environments or strictly controlled access partitions for classified programs, adding infrastructure complexity and cost to multi-program defense contractors.
Earned value management implementation on EVMS-required contracts demands that the ERP be integrated with scheduling tools (Primavera P6, MS Project) and that baseline change control processes be established and audited by the government program office before contract performance measurement begins.
Transition from incumbent accounting systems (often legacy Deltek versions or custom spreadsheet environments) must preserve full project cost history for open contracts, as DCAA can request historical cost data for all open and recently closed contracts during incurred cost audits.
Frequently Asked Questions
What is DCAA compliance and why does it matter for defense contractor ERP?
The Defense Contract Audit Agency (DCAA) audits the accounting systems of defense contractors to ensure they can accurately accumulate and report costs on cost-reimbursable government contracts. An adequate accounting system must segregate direct from indirect costs, identify costs by contract, consistently apply cost accounting practices, and maintain timekeeping controls that prevent retroactive timecard changes. ERP systems used by defense contractors must pass DCAA pre-award surveys and be able to support floor checks (unannounced audits of timekeeping practices). Failure can result in contract loss, withheld payments, and debarment.
What is the difference between FAR and DFARS for ERP compliance?
FAR (Federal Acquisition Regulation) is the primary set of rules governing federal procurement and applies to all federal agencies. DFARS (Defense Federal Acquisition Regulation Supplement) contains additional rules specific to Department of Defense contracts, including cybersecurity requirements (DFARS 252.204-7012 for CUI), earned value management thresholds, and specific cost accounting requirements. Defense contractor ERP systems must comply with both FAR Part 31 (allowable costs) and relevant DFARS clauses, and must be capable of generating reports that demonstrate compliance with both regulatory frameworks.
What is earned value management (EVM) and which ERP systems support it?
Earned value management (EVM) is a project performance measurement methodology required by DoD on contracts above $20M (Significant EVM) or $100M (Full EVMS) thresholds. It integrates scope, schedule, and cost to provide objective performance measurement using BCWS (Budgeted Cost of Work Scheduled), BCWP (Budgeted Cost of Work Performed), and ACWP (Actual Cost of Work Performed). ERP systems supporting EVM include SAP S/4HANA Defense, Deltek Costpoint with EVM module, Oracle Primavera for scheduling integration, and Cobra (Deltek) as a dedicated EVM tool integrated with the ERP.
What is CMMC and how does it affect defense contractor ERP selection?
CMMC (Cybersecurity Maturity Model Certification) is a DoD framework requiring defense contractors to demonstrate cybersecurity practices protecting Controlled Unclassified Information (CUI). Level 1 requires 17 basic safeguarding practices. Level 2 requires 110 practices aligned to NIST SP 800-171. Level 3 requires additional practices from NIST SP 800-172. ERP systems handling CUI must be deployed in environments that satisfy these requirements, including multi-factor authentication, audit logging, data encryption, and access control. Cloud ERP vendors offering IL4/IL5 or GCC High deployments (Microsoft, Oracle, SAP) provide pre-configured environments designed to meet CMMC Level 2 and Level 3 requirements.
How does ITAR affect ERP system access controls for defense contractors?
ITAR (International Traffic in Arms Regulations) restricts access to defense articles, technical data, and services listed on the United States Munitions List (USML) to US persons, unless a State Department license is obtained. For ERP systems, this means that foreign nationals (including employees and contractors) must be prevented from accessing program data, cost details, and technical documentation for ITAR-controlled programs. ERP access controls must enforce role-based restrictions tied to citizenship and program authorization, and cloud hosting must ensure that data does not reside on servers accessible to non-US-person personnel.
What is government-furnished property (GFP) and how is it tracked in ERP?
Government-furnished property (GFP) includes equipment, materials, and real property provided by the government to a contractor for use in contract performance. FAR Part 45 requires contractors to maintain a property management system that accounts for GFP by item, contract, location, and condition. ERP systems must track GFP receipt, storage, utilization, maintenance, and final disposition (return, transfer, or abandonment), and produce property reports (DD Form 1342) for government property administrators. Failure to adequately account for GFP can result in financial liability for lost or damaged government property.
How do defense ERP systems handle indirect cost pool accounting?
Defense contractors typically maintain multiple indirect cost pools including fringe benefits, overhead (shop overhead vs. G&A), and general and administrative expenses. Each pool has a defined allocation base (e.g., direct labor dollars, total cost input, or value-added base). ERP systems calculate indirect cost rates by dividing pool costs by the allocation base, then apply these rates to direct contracts. For billing purposes, provisional billing rates are submitted to the DCAA and ACO (Administrative Contracting Officer) at the start of the year and reconciled to actual rates in the annual incurred cost submission.
What reporting capabilities does a defense contractor ERP need to provide?
Defense contractor ERP must produce Contract Funds Status Reports (CFSR), Cost Performance Reports (CPR) for EVM contracts, Summary Subcontractor Reports (SSR), and Incurred Cost Electronic (ICE) submissions for DCAA audit. The system must support contract-level profit and loss reporting by CLIN and task order, indirect rate calculation schedules, labor distribution reports by employee and contract, subcontract status reports with consent-to-subcontract documentation, and cost-share tracking for cost-sharing contracts. Ad-hoc reporting must allow program managers to monitor contract cost and schedule performance without relying on central finance.
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