Difference between revisions of "Recognizing Elements Affecting Facilities Capital Cost Of Money"
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Cost of money includes facilities capital cost of money (FCCM) and cost of money as an element of the cost of capital assets under construction. Cost of Money is an | Cost of money includes facilities capital cost of money (FCCM) and cost of money as an element of the cost of capital assets under construction. Cost of Money is an | ||
Revision as of 09:42, 30 October 2023
==General Information==[1]
Cost of money includes facilities capital cost of money (FCCM) and cost of money as an element of the cost of capital assets under construction. Cost of Money is an imputed cost related to the cost of contractor capital committed to facilities and it is not a form of interest. Contractors often use their own money (capital) to invest in facilities and equipment that benefit the Government. The contractor could have instead used that money for other investments, for example, to purchase bonds that would receive interest. FCCM is the method used to determine the amount reimbursable to the contractor for using its own money to invest in facilities and equipment that benefit the Government instead of using it for other investments for which it could receive a return on the investment.
Cost of money is based on the net book value of tangible capital assets and intangible capital assets that are subject to amortization. Regardless of whether the contract is otherwise subject to Cost Accounting Standards (CAS), to be allowable, the contractor’s capital investment must:
● be measured, assigned, and allocated to contracts in accordance with CAS 414 Cost of Money as an Element of the Cost of Facilities Capital (see 414-30 for definitions) or
● be measured and added to the cost of capital assets under construction in accordance with CAS 417 Cost of Money as an Element of the Cost of Capital Assets Under Construction (see 417-30 for definitions), and
● meet the requirements of FAR 31.205-52 Asset valuations resulting from business combinations, and
● be specifically proposed in the contract cost proposal.
There is no requirement for a contractor to propose facilities capital cost of money in pricing and performing a contract. However, if cost of money is not proposed during contract pricing, the contractor surrenders any right to claim it during contract performance. Therefore, the contractor must include the cost in its proposal to the Government for cost of money to be allowable. If the contractor did not propose FCCM, then the costs are unallowable per FAR 52.215-17. If the contract does not contain the clause FAR 52.215-17 waiver, the auditor should still question the costs per this FAR, as the clause is still applicable under the Christian Doctrine.
References
- ↑ DCAA - Chapter 18 - Cost of Money
