CAS 401 - Consistency in Estimating, Accumulating, & Reporting Costs
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9904.401-20 Purpose[1]
The purpose of this Cost Accounting Standard is to ensure that each contractor's practices used in estimating costs' for a proposal are consistent with cost accounting practices used in accumulating and reporting costs. Consistency in the application of cost accounting practices is necessary to enhance the likelihood that comparable transactions are treated alike.
With respect to individual contracts, the consistent application of cost accounting practices will facilitate the preparation of reliable cost estimates used in pricing a proposal and their comparison with the costs of performance of the resulting contract. Such comparisons provide one important basis for financial control over costs during contract performance and aid in establishing accountability for cost in the manner agreed to by both parties at the time of contracting. The comparisons also provide an improved basis for evaluating estimating capabilities.
9904.401-30 Definitions
The following are definitions of terms which are prominent in this Standard. Other terms defined elsewhere in this part 99 shall have the meanings ascribed to them.
(1) Accumulating Costs means the collecting of cost data in an organized manner, such as through a system of accounts.
(2) Actual Costs means an amount determined on the basis of cost incurred (as distinguished from forecasted cost), including standard cost properly adjusted for applicable variance.
(3) Estimating Costs means the process of forecasting a future result in terms of cost, based upon information available at the time.
(4) Indirect Cost Pool means a grouping of incurred costs identified with two or more objectives but not identified specifically with any final cost objective.
(5) Pricing means the process of establishing the amount or amounts to be paid in return for goods or services.
(6) Proposal means any offer or other submission used as a basis for pricing a contract, contract modification or termination settlement or for securing payments thereunder.
(7) Reporting Costs means provision of cost information to others.
9904.401-40 Fundamental Requirement
(a) A contractor's practices used in estimating costs in pricing a proposal shall be consistent with his cost accounting practices used in accumulating and reporting costs.
(b) A contractor's cost accounting practices used in accumulating and reporting actual costs for a contract shall be consistent with his practices used in estimating costs in pricing the related proposal.
(c) The grouping of homogeneous costs in estimates prepared for proposal purposes shall not per se be deemed an inconsistent application of cost accounting practices under paragraphs when such costs are accumulated and reported in greater detail on an actual cost basis during contract performance.
9904.401-50 Techniques for Application
(a) The standard allows grouping of homogeneous costs in order to cover those cases where it is not practicable to estimate contract costs by individual cost element or function. However, costs estimated for proposal purposes shall be presented in such a manner and in such detail that any significant cost can be compared with the actual cost accumulated and reported therefor. In any event the cost accounting practices used in estimating costs in pricing a proposal and in accumulating and reporting costs on the resulting contract shall be consistent with respect to:
- (1) The classification of elements or functions of cost as direct or indirect;
- (2) The indirect cost pools to which each element or function of cost is charged or proposed to be charged; and
- (3) The methods of allocating indirect costs to the contract.
(b) Adherence to the requirement of 9904.401-40(a) of this standard shall be determined as of the date of award of the contract, unless the contractor has submitted cost or pricing data pursuant to 10 U.S.C. 2306a or 41 U.S.C. 254(d) (Pub. L. 87-653), in which case adherence to the requirement of 9904.401-40(a) shall be determined as of the date of final agreement on price, as shown on the signed certificate of current cost or pricing data. Notwithstanding 9904.401-40(b), changes in established cost accounting practices during contract performance may be made in accordance with part 99.
