Redstone Government Consulting Blog | Proposal Cost Volume Development & Pricing

The FAR Council issued a proposed rule on November 29, 2024 to amend the FAR to increase acquisition related thresholds for inflation.

Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Estimating System Compliance

Again, this year our friendly DCAA auditors have taken up the government requirement to calculate and publish annually the new compensation cap as provided for in Section 702 of the Bipartisan Budget Act of 2013 (BBA; Pub. L. 113-67), dated December 26, 2013. The 2025 compensation cap amount is $671,000. Below we have provided the compensation caps going back to 2019.

Topics: Proposal Cost Volume Development & Pricing, Employee & Contractor Compensation, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

FAR Part 36 - Construction and Architect-Engineer Contracts provides the direction to contracting officer on the expected processes and requirements around contracting for construction and Architectural and Engineering (A&E) services. Part 36 addresses construction and A&E separately and we have included some of the key areas below.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Commercial Item Determination, Federal Construction Contracting

CAS 411 provides criteria for accounting for the measurement and assignment of material costs to cost objectives and follows generally accepted accounting principles (GAAP).

What is the Purpose of CAS 411?

If you don’t have contracts subject to full CAS, then FAR 31.205-26 Material costs requires contractors to implement GAAP when accounting for material. Material costs can either be charged direct to a contract or assigned to contracts through inventory accounts. Material that is charged direct should be identified on the purchase order and material assigned through an inventory account should be consistently applied by category of material. While CAS 411 requires written policies for accounting for material, it is a best practice to establish written policies whether CAS 411 is applicable or not.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Material Management and Accounting System (MMAS)

FAR 31.205-20 makes interest unallowable, however, cost of money is not interest based on the CAS Board and is allowable (see our article Interest is Unallowable – How is That Possible). Cost of money is an imputed cost that is provided to contractors to recover the time value of money invested in facilities and equipment that benefit government contracts. Contractors that do not have contracts subject to full CAS, follow FAR 31.205-10 Cost of money which incorporates CAS 414 (Cost of Money as an Element of the Cost of Facilities Capital) and CAS 417 (Cost of Money as an Element of the Cost of Capital Assets Under Construction) and allows cost of money as a cost as long as it is measured, assigned and allocated in accordance with the standard. Cost of money must be specifically identified and proposed in cost proposals to be claimed or billed. Let’s discuss the requirements of CAS 414 and 417.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

CAS 416 provides criteria for the measurement of insurance costs, the assignment of such costs to cost accounting periods, and the allocation to final cost.

Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

The Office of the Under Secretary of Defense, Defense Pricing and Contracting (DPC) issued a Memorandum dated May 5, 2024, to Agencies on the Treatment of Nontraditional Defense Contractors.

Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination

DoD issued a final rule DFARS Case 2023-D010 on May 30, 2024, amending The Defense Federal Acquisition Regulation Supplement (DFARS) implementing Section 803 of the National Defense Authorization Act on data required in support of commerciality determinations and price reasonableness under procurements for major weapon systems. The purpose is to provide additional guidance related to the data required to support a request for a commercial determination and the price reasonableness process.

Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination

Cost Accounting Standard (CAS) 409 provides the criteria for assigning costs (i.e., depreciation) of tangible capital assets to cost accounting periods and allocating those costs to contracts in an objective and consistent manner.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, DFARS Business Systems, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

There is no such thing as a risk-free interaction with the Government when it comes to submitting data.

Topics: Proposal Cost Volume Development & Pricing, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Estimating System Compliance