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    CAS 414-Cost of Money

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    Arshad Mahmood
    CAS 414 establishes guidelines for calculating and allocating the cost of money associated with facilities capital employed in government contracts. It recognizes facilities capital as a contract cost and provides criteria for measuring an appropriate share of cost of money. The calculation involves determining the average net book value of facilities for indirect cost pools, multiplying this by the Treasury rate of 2.625%, and dividing the cost of money by the allocation base. For some contracts not covered by CAS, cost of money must be specifically proposed to be recoverable, but it is still considered in allowable rental costs even if not proposed. Some solicitations like SBIRs prohibit claiming cost of money.

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    CAS 414-Cost of Money

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    Arshad Mahmood
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    CAS 414 establishes guidelines for calculating and allocating the cost of money associated with facilities capital employed in government contracts. It recognizes facilities capital as a contract cost and provides criteria for measuring an appropriate share of cost of money. The calculation involves determining the average net book value of facilities for indirect cost pools, multiplying this by the Treasury rate of 2.625%, and dividing the cost of money by the allocation base. For some contracts not covered by CAS, cost of money must be specifically proposed to be recoverable, but it is still considered in allowable rental costs even if not proposed. Some solicitations like SBIRs prohibit claiming cost of money.

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    CAS 414 establishes guidelines for calculating and allocating the cost of money associated with facilities capital employed in government contracts. It recognizes facilities capital as a contract cost and provides criteria for measuring an appropriate share of cost of money. The calculation involves determining the average net book value of facilities for indirect cost pools, multiplying this by the Treasury rate of 2.625%, and dividing the cost of money by the allocation base. For some contracts not covered by CAS, cost of money must be specifically proposed to be recoverable, but it is still considered in allowable rental costs even if not proposed. Some solicitations like SBIRs prohibit claiming cost of money.

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    © All Rights Reserved
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    276 views2 pages

    CAS 414-Cost of Money

    Uploaded by

    Arshad Mahmood
    CAS 414 establishes guidelines for calculating and allocating the cost of money associated with facilities capital employed in government contracts. It recognizes facilities capital as a contract cost and provides criteria for measuring an appropriate share of cost of money. The calculation involves determining the average net book value of facilities for indirect cost pools, multiplying this by the Treasury rate of 2.625%, and dividing the cost of money by the allocation base. For some contracts not covered by CAS, cost of money must be specifically proposed to be recoverable, but it is still considered in allowable rental costs even if not proposed. Some solicitations like SBIRs prohibit claiming cost of money.

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    CAS 414 - Cost of Money

    CAS 414 - Cost of Money as an Element of the Cost of Facilities Capital. This Standard has
    been incorporated into FAR 31.205-10 (Cost of Money) and is therefore applicable to all
    government contracts and contractors. .
    CAS 414 recognizes that the cost of facilities capital is a contract cost and provides criteria for
    measuring and allocating an appropriate share of the cost of money that can be identified with
    the facilities employed in a business.

    CAS 414 contains some very specific techniques that must be used to compute cost of money
    in connection with price proposals, forward pricing rate agreements, and with the establishment
    of final indirect cost rates. Cost of money is an imputed cost which is identified with the total
    facilities capital associated with each indirect cost pool. Generally, cost of money is allocated to
    contracts over the same base used to allocate the other expenses included in the pool.
    The calculation of the cost of money for each contract involves several steps.
    1. The average net book value of facilities for each indirect expense pool having a
    significant allocation of facilities is identified from accounting data used for contract
    costing.
    2. The cost of money devoted to facilities capital for each indirect expense pool is
    the product of these net book values multiplied by the cost of money rates per the
    Secretary of the Treasury under Public Law 92-41, 85 Statute 97. The current rate is
    2.625% and is updated every six months. You can always find the current rate here.
    3. 3) Facilities capital cost of money factors are computed by dividing the cost of
    money for each pool by the corresponding allocation base. The allocation bases used in
    this computation must be compatible with the bases used for applying indirect costs in
    determining contract costs.

    The facilities capital cost of money factors, wherever applicable, must be computed in
    accordance with the CASB-CMF form, Facilities Capital Cost of Money Factors and
    Computation. The CASB-CMF form and instructions are easily found through an Internet
    search. For example, here's one from a DOE website.

    For contracts covered by FAR but not CAS, the recovery of Cost of Money is usually conditional
    upon having been specifically identified and proposed in the price proposal. However, even
    when the contractor waives Cost of Money by failing to propose it, Cost of Money is still
    considered in computing the normal cost of ownership for purposes of determining the amount
    of allowable rental cost in a related-party lease under the rental cost principle (FAR 31.205-36).
    See Appeal of Engineering Inc., NASA BCA No. 187-2.

    Some solicitations, such as SBIRs (Small Business Innovative Research) and cost sharing
    agreements specifically prohibit contractors from claiming cost of money as a contract cost.
    Posted by Paul D. Cederwall at 6:03 AM
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    Labels: CAS
    2 comments:

    David Koeltzow said...
    I recommend modifying your next to last sentence to: "For contracts [eliminate "not"] covered
    by FAR but not CAS, the recovery of Cost of Money is [usually] conditional upon having
    been specifically identified and proposed in the price proposal." An exception to this is the
    Engineering Inc. ruling that stated FCCOM is part of the cost of ownership for determining
    whether allowable costs should be based on constructive ownership costs or rental costs.
    Engineering Inc. had not proposed FCCOM but did propose operating lease costs from a
    related party.

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