Offsets - Cost Accounting Standards

Offsets

Offsets are not allowed for different CAS Cost Accounting Changes or Non-Compliances

FAR

(a) General

(1) The CFAO shall coordinate with the affected contracting officers before negotiating and resolving the cost impact when the estimated cost impact on any of their contracts is at least $100,000. However, the CFAO has the sole authority for negotiating and resolving the cost impact.

(2) The CFAO may resolve a cost impact attributed to a change in cost accounting practice or a noncompliance by adjusting a single contract, several but not all contracts, all contracts, or any other suitable method.

(3) In resolving the cost impact, the CFAO--

(i) Shall not combine the cost impacts of any of the following:

(A) A required change and a unilateral change.

(B) A required change and a noncompliance.

(C) A desirable change and a unilateral change.

(D) A desirable change and a noncompliance.

(ii) Shall not combine the cost impacts of any of the following unless all of the cost impacts are increased costs to Government:

(A) One or more unilateral changes.

(B) One or more noncompliances.

(C) Unilateral changes and noncompliances; and

(iii) May consider the cost impacts of a unilateral change affecting two or more segments to be a single change if--

(A) The change affects the flow of costs between segments; or

(B) Implements a common cost accounting practice for two or more segments.

(4) For desirable changes, the CFAO should consider the estimated cost impact of associated management actions on contract costs in resolving the cost impact.

Cases

Lockheed Martin Corporation v. The United States, COFC No. 00-129C, March 2006

CAS 409 offsett not allowed against CAS 418 Non-Compliance

Raytheon

In Raytheon Co., ASBCA Nos. 57801 et al. (May 7, 2015), the Board held that under FAR 30.606 contractors may not offset cost impacts from simultaneous accounting changes within the same business segment,