Sign In
  • Question

    Would facilities capital cost of money allowed in a contract be shown in a CLIN? If not, how should it be addressed in the body of the contract to address amounts billed? Should the FCCOM calculation sheet have been included?


    Answer

    When CLIN prices are determined, FCCOM is already included in the price of the CLIN, similar to how overhead, and G & A expenses are included in CLIN prices (not separately billed).  The FCCOM amount is actually an estimate, using the following process as explained in the DFARS.

    At
    DFARS 215.404-71-4 Facilities capital employed, paragraph (b):
     “Contract facilities capital estimates. The contracting officer shall estimate the facilities capital cost of money and capital employed using—
    (1) An analysis of the appropriate Forms CASB-CMF and cost of money factors (48 CFR 9904.414 and FAR 31.205-10); and
    (2) DD Form 1861, Contract Facilities Capital Cost of Money.”
    Again, the FCCOM amount is an estimate that is included in the target cost objective for coming up with a pre-award negotiation objective and is therefore “negotiated into” the negotiated target cost.
    In the same DFARS clause at paragraph (c):
     “Use of DD Form 1861. See PGI 215.404-71-4(c) for obtaining field pricing support for preparing DD Form 1861.
    (1) Purpose. The DD Form 1861 provides a means of linking the Form CASB-CMF and DD Form 1547, Record of Weighted Guidelines Application. It—
    (i) Enables the contracting officer to differentiate profit objectives for various types of assets (land, buildings, equipment). The procedure is similar to applying overhead rates to appropriate overhead allocation bases to determine contract overhead costs.
    (ii) Is designed to record and compute the contract facilities capital cost of money and capital employed which is carried forward to DD Form 1547.”

    The intent is to estimate FCCOM for establishing cost and treat this cost like an indirect cost for payment.  When contractors bill for progress payments based on actual costs incurred, they bill at total cost, not separately for direct labor, overheads, G&A, and COM discreetly.  So just like overhead is included in billings for progress payments, so are FCCOM costs [see (c)(1)(i) directly above]. 


    Open full Question Details