Deltek Costpoint is the dominant ERP platform for federal government contractors. If your company runs 20 or more covered contracts, there is a reasonable chance your payroll, project accounting, and billing all flow through Costpoint. It is a solid platform for its core purpose: tracking project-based labor costs, generating invoices, and maintaining the cost accounting records that DCAA audits require.
It is not a solid platform for SCA-specific fringe benefit compliance tracking. That is not a criticism of Costpoint specifically. The platform was designed for DCAA cost accounting requirements, not for Wage and Hour Division prevailing wage compliance. Those are two related but distinct compliance domains with different data structures, different reporting obligations, and different audit methodologies. What Costpoint does well is cost accounting. What it leaves unaddressed, or only partially addressed, is the per-employee per-covered-hour fringe equivalency calculation that SCA compliance requires.
What Costpoint Does Handle Reasonably Well
Before describing the gaps, it is worth being precise about what Costpoint's payroll module does address for SCA-covered contractors. Costpoint processes wages correctly if you configure your labor categories with the right pay rates. It tracks hours by project and by contract, which gives you the covered-hours denominator you need for fringe equivalency calculations. Its reporting module can generate labor detail exports by employee, by contract, and by period that give you a starting point for compliance analysis.
Costpoint also integrates with payroll tax processing and can accommodate different pay rates for different labor categories on different contracts, which is necessary when your employees work across contracts with different WD wage rates. That capability is real and useful.
The Gap: Fringe Equivalency Is Not Native
Costpoint does not natively calculate whether your benefit plan contributions meet the SCA H&W floor on a per-employee per-covered-hour basis. The platform processes payroll and applies configured pay rates. It does not connect to your benefit administration system to pull employer plan contributions, does not know the current H&W rate from the applicable AAM for each contract, and does not run the equivalency calculation that determines whether cash in lieu is owed.
In practice, this means every Costpoint-based contractor we have spoken with handles the fringe equivalency calculation outside Costpoint. The typical workflow: export covered-hours data from Costpoint by employee and contract, export employer benefit contribution data from the HR or benefits administration system (often a separate ADP or BenefitPoint instance), manually join the two datasets, apply the current H&W rate from the AAM, and run the calculation in a spreadsheet. The cash in lieu amount, if any, is then entered as a manual payroll adjustment in Costpoint before the pay run closes.
That workflow works. It produces a defensible compliance calculation when it is done correctly. The problems arise from the operational characteristics of a manual multi-system process running every two weeks across multiple contracts and employees.
The Operational Failure Modes
Manual joins between Costpoint covered-hours exports and benefit system contribution data fail in predictable ways. The most common: an employee changes health plan enrollment tier mid-year and the new contribution amount is not updated in the spreadsheet for several pay periods. The equivalency calculation continues running at the prior tier's cost until someone notices the discrepancy or a review triggers a check.
A second frequent failure mode: an employee's covered-hours mix changes when they start a new contract or rotate off an existing one, but the spreadsheet is not updated to reflect the new contract's H&W rate. If the new contract's WD was issued under a more recent AAM with a higher H&W rate than the prior contract, and the spreadsheet is still applying the prior rate, the fringe equivalency calculation systematically understates the obligation for that employee going forward.
Third, the manual process has a timing dependency. The covered-hours export from Costpoint needs to be pulled after the payroll period closes but before the cash in lieu adjustment is due in the pay run. When payroll deadlines compress, that verification step gets skipped, and the assumption that the benefit plan meets the floor is carried forward without checking. Skipping the check is not malicious. It is what happens when a two-person payroll team is closing payroll for 80 employees across 30 contracts on a Friday afternoon.
Costpoint Configuration Options That Help Partially
Some Costpoint implementations include custom labor category configurations or earnings code structures that payroll teams use to track SCA fringe credit amounts alongside regular wages. The approach typically involves creating dedicated earnings codes for fringe benefit credits and cash in lieu payments, then running the equivalency calculation externally and entering the results as earnings code values before the payroll run.
This is a valid approach and it produces a more organized payroll record than an entirely external spreadsheet. But it does not solve the fundamental problem: the equivalency calculation that determines what values to enter is still being run outside Costpoint with manually exported data. The quality of the Costpoint records is downstream of the quality of the external calculation process. If the external calculation has errors, the earnings codes in Costpoint will record those errors as correct payroll data, and they will appear on WH-347 reports as if they were compliant.
What the WH-347 Export Problem Looks Like
Costpoint does not generate WH-347 reports natively in the standard DOL format. Some contractors use third-party add-ons or custom report configurations that pull Costpoint data into a WH-347-formatted output. The data mapping in these configurations is only as accurate as the underlying Costpoint configuration, and the fringe column data in particular depends on whether your earnings code setup correctly reflects the benefit credit and cash in lieu structure that WH-347 requires.
The most common WH-347 output problem from Costpoint-based configurations: the fringe column aggregates total employer benefit costs without distinguishing between plan contributions and cash in lieu, because the Costpoint earnings code structure does not make that distinction. As described in our earlier article on WH-347 errors, an undifferentiated fringe figure in column 6 is technically deficient and will prompt document requests if an auditor reviews the certified payroll reports.
What the Practical Answer Looks Like
We are not suggesting Costpoint needs to be replaced. For most govcon contractors, Costpoint is the right platform for project-based cost accounting, and pulling it out would be a disruptive and expensive project with limited compliance benefit. The answer is a compliance layer that connects to Costpoint at the data level rather than replacing it.
What that means in practice: a system that ingests the covered-hours output from Costpoint, matches each employee's covered-hours record to their current benefit plan contribution from the benefits system, applies the current H&W rate for each contract's applicable WD, runs the equivalency calculation, and surfaces any cash in lieu obligations before the pay run closes. The cash in lieu amounts can then be fed back into Costpoint as an earnings code adjustment, completing the payroll record correctly.
That is the architecture we built at CVRD Health, specifically because the Costpoint gap is the most common infrastructure problem we encountered when talking with govcon payroll teams. Costpoint is excellent at what it does. SCA fringe equivalency is outside what it was designed to do. Those two things can both be true without requiring a platform replacement.