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Pricing and Cost Accounting, 3rd Edition

Book Description

The essential reference to help federal contractors negotiate and maintain profitable contracts—Now in its third edition!

This is the essential reference to help federal contractors negotiate and maintain profitable contracts—and remain in compliance throughout the life of the contract.
Government contracting rules and regulations have changed significantly over the past six years. This new third edition addresses these changes and more:
New thresholds for certification of cost and pricing data
Revisions in cost accounting standards
Implementation of commercial time-and-material and labor-hour contracts
New, stringent ethics requirements
Impact of stimulus funding
Revised cost principles, including excessive pass-through costs, post-retirement benefits, and travel costs
Redirected audit initiatives based on the GAO review of DCAA
Plus…changed requirements for bidding…pricing…cost accounting…subcontracting…contract modification…all the information you need to be in compliance with the new rules.
No other single book provides as much up-to-date federal procurement cost and pricing information in such a concise - yet comprehensive - format.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. About the Author
  5. Dedication
  6. Acknowledgments
  7. Table of Contents
  8. Preface
  9. Chapter 1. Federal Government Procurement Methods
    1. Commercial Items
    2. Sealed Bids
    3. Contracting By Negotiation
    4. Timeliness—Sealed Bid and Competitive Proposals
    5. Evaluation Process—Competitive Proposals
    6. Communications—Competitive Proposals
    7. Truth in Negotiations—Competitive Cost-Type Proposals and All Non-Competitive Proposals
  10. Chapter 2. Types of Government Contracts
    1. Government Selection of Contract Types
    2. Fixed-Price Contracts
    3. Firm-Fixed-Price Contract
    4. Fixed-Price-Incentive Contract
    5. Incentives Contract
    6. Firm-Fixed-Price with Economic Adjustment Contract
    7. Fixed-Price Redeterminable Contract
    8. Firm-Fixed-Price Contract with Successive Targets
    9. Fixed-Price, Level-of-Effort Contract
    10. Fixed-Price, Award-Fee Contract
    11. Cost-Reimbursement Contracts
    12. Cost-Sharing Contract
    13. Cost-Reimbursement-Only Contract
    14. Cost-Plus-Fixed-Fee Contract
    15. Cost-Plus-Incentive-Fee Contract
    16. Cost-Plus-Award-Fee Contract
    17. Other Contract Types
    18. Time-and-Materials Contract
    19. Labor-Hour Contract
    20. Indefinite-Delivery Contract
    21. Letter Contract
    22. Basic Agreement
    23. Basic Ordering Agreement
    24. Unauthorized Contract Types and Variations
    25. Other Transactions
    26. Contract Type and Potential Financial Reward
  11. Chapter 3. Accounting System Requirements
    1. Basic Record Keeping
    2. Internal Controls and Written Policies and Procedures
    3. Managing Contract Costs
    4. Allocating Costs
    5. Direct and Indirect Costs
    6. Overhead Costs
    7. Service Centers
    8. General and Administrative Costs
    9. Consistent Application
    10. Establishing a Cost Structure
    11. Monitoring Indirect Costs
    12. Other Cost Accounting Concepts
    13. Credits
  12. Chapter 4. Cost Allowability
    1. Origin of Government Contract Cost Principles
    2. Applicability of Government Cost Regulations
    3. FAR Concept of Total Cost
    4. Credits
    5. Incurred Costs
    6. Allowability of Costs
    7. Reasonableness
    8. Allocability
    9. Contract Terms/Advance Agreements
    10. Indirect Cost Pools
    11. Directly Associated Cost
    12. Cosmetically Low Rates
    13. Segregation of Unallowable Costs
  13. Chapter 5. Principles—Selected Costs
    1. Generally Unallowable Costs
    2. Public Relations and Advertising Costs (31.205-1)
    3. Bad Debts (31.205-3)
    4. Contributions or Donations (31.205-8)
    5. Entertainment Costs (31.205-14)
    6. Fines, Penalties, and Mischarging Costs (31.205-15)
    7. Interest and Other Financial Costs (31.205-20)
    8. Lobbying and Political Activity Costs (31.205-22)
    9. Losses on Other Contracts (31.205-23)
    10. Organization Costs (31.205-27)
    11. Costs Related to Legal and Other Proceedings (31.205-47)
    12. Goodwill (31.205-49)
    13. Costs of Alcoholic Beverages (31.205-51)
    14. Asset Valuations Resulting from Business Combinations (31.205-52)
    15. Excessive Pass-Through Costs (31.203(i))
    16. Costs Related to Human Resources
    17. Compensation for Personal Services (31.205-6)
    18. Employee Stock Ownership Plans (ESOPs) (31.205-6(q))
    19. Employee Morale, Health, Welfare, Food Service, and Dormitory Costs and Credits (31.205-13)
    20. Professional and Consulting Costs (31.205-33)
    21. Recruitment Costs (31.205-34)
    22. Relocation Costs (31.205-35)
    23. Trade, Business, Technical and Professional Activity Costs (31.205-43)
    24. Training and Educational Costs (31.205-44)
    25. Travel Costs (31.205-46)
    26. Costs Related to Physical Resources
    27. Cost of Money (31.205-10)
    28. Depreciation (31.205-11)
    29. Gains and Losses on Disposition of Depreciable Property or Other Assets (31.205-16)
    30. Idle Facilities and Idle Capacity Costs (31.205-17)
    31. Maintenance and Repair Costs
    32. Manufacturing and Production Engineering Costs (31.205-25)
    33. Plant Reconversion Costs (31.205-31)
    34. Rental Costs (31.205-36)
    35. Special Tooling and Special Test Equipment Costs (31.205-40)
    36. New Business-Related Costs
    37. Independent Research and Development and Bid and Proposal Costs (31.205-18)
    38. Selling Costs (31.205-38)
    39. Miscellaneous Costs
    40. Contingencies (31.205-7)
    41. Economic Planning Costs (31.205-12)
    42. Insurance and Indemnification (31.205-19)
    43. Material Costs (31.205-26)
    44. Other Business Expenses (31.205-28)
    45. Patent Costs (31.205-30)
    46. Precontract Costs (31.205-32)
    47. Royalties and Other Costs for Use of Patents (31.205-37)
    48. Taxes (31.205-41)
    49. Termination Costs (31.205-42)
    50. Environmental Cleanup Costs
    51. Restructuring Costs (DFARS 231.205.70)
    52. Cost of Government Shutdowns
  14. Chapter 6. Cost Accounting Standards
    1. Original CAS Legislation
    2. Basics of Public Law 91-379
    3. CASB Operating Policies
    4. After The Demise of The Original CASB
    5. Basic CAS Requirements
    6. Price Adjustments
    7. Covered Contracts
    8. Exempt Contracts
    9. Waivers of CAS Coverage
    10. CAS Steering Committee and Working Group
    11. The Standards
    12. Standard 401: Consistency in Estimating, Accumulating, and Reporting Costs
    13. Standard 402: Consistency in Allocating Costs Incurred for the Same Purposes
    14. Standard 403: Allocation of Home Office Expenses to Segments
    15. Standard 404: Capitalization of Tangible Assets
    16. Standard 405: Accounting for Unallowable Costs
    17. Standard 406: Cost Accounting Period
    18. Standard 407: Use of Standard Costs For Direct Material and Direct Labor
    19. Standard 408: Accounting for Costs of Compensated Personal Absences
    20. Standard 409: Depreciation of Tangible Capital Assets
    21. Standard 410: Allocation of Business Unit General and Administrative Expenses to Final Cost Objectives
    22. Standard 411: Accounting for Acquisition Costs of Materials
    23. Standard 412: Composition and Measurement of Pension Cost
    24. Standard 413: Adjustment and Allocation of Pension Cost
    25. Standard 414: Cost of Money As an Element of the Cost of Facilities Capital
    26. Standard 415: Accounting for the Cost of Deferred Compensation
    27. Standard 416: Accounting for Insurance Costs
    28. Standard 417: Cost of Money As an Element of the Cost of Capital Assets Under Construction
    29. Standard 418: Allocation of Direct and Indirect Costs
    30. Standard 420: Accounting for Independent Research And Development (IR&D) and Bid and Proposal (B&P) Costs
    31. Disclosure Statement
    32. Dollar Threshold of Contract Awards For Determining Filing Requirements
    33. Revisions to Disclosure Statements
    34. Exemptions
    35. Review and Approval of Disclosure Statement
    36. Detailed Requirements of Disclosure Statement
  15. Chapter 7. Developing Cost Estimates for Proposals
    1. The Estimating Process
    2. Quantity Estimates
    3. Make-or-Buy Decisions
    4. Direct Labor Costs
    5. Direct Material Costs
    6. Other Direct Costs
    7. Indirect Costs
    8. Indirect Cost Estimating Worksheet
    9. Submitting Price Proposals
    10. General Instructions
    11. Required Breakdowns
  16. Chapter 8. Contract Price Negotiation and Profit Guidelines
    1. Government vs. Commercial Profit
    2. Department of Defense Guidelines
    3. Weighted Guidelines Method
    4. Profit Objective Determination
    5. Values: Normal and Designated Ranges
    6. Cost Efficiency Factor
    7. NASA Guidelines
    8. Other Agencies’ Guidelines
  17. Chapter 9. Truth in Negotiations
    1. Applicability of The Law
    2. Basic Coverage
    3. Covered Contracts
    4. Prohibitions on Obtaining Cost or Pricing Data
    5. Adequate Price Competition
    6. Commercial Items
    7. Waivers
    8. Requiring Information Other Than Cost or Pricing Data
    9. Price Reductions
    10. Special Subcontract Considerations
    11. Government Burden of Proof
    12. Cost or Pricing Data
    13. Available Data
    14. Submission of Data
    15. Reliance
    16. Price Increase
    17. Setoffs
    18. The Role of a Certificate
  18. Chapter 10. Contract Administration
    1. Responsibility for Contract Administration and Audits
    2. Contract Administration Duties
    3. Contract Audits
    4. Financial Aspects
    5. Contract Payments
    6. Provisional or Interim Billing Rates
    7. Final Indirect Cost Rates
    8. Cost-Sharing Rates and Ceilings on Indirect Cost Rates
    9. Forward-Pricing Rate Agreements
    10. Quick-Closeout Procedure
    11. Disallowing Costs After Incurrence
    12. Performance Aspects
    13. Suspension of Work, Stop-Work Orders, and Government Delay of Work
    14. Past Performance Evaluations
    15. Contract Modifications
    16. Subcontracting
    17. Government Property
    18. Earned Value Management Systems
    19. Termination for Convenience
    20. Ethics
  19. Chapter 11. Government Contract Audits
    1. Accounting System Review
    2. Basic Record Keeping
    3. Internal Controls and Written Policies and Procedures
    4. Payment Requests
    5. Limitation of Cost Clause
    6. Estimating System Review
    7. Organizational Relationships
    8. Review Requirements
    9. Make-or-Buy Decisions
    10. Updating Cost or Pricing Data
    11. DOD Estimating System Requirements
    12. Labor Recording System Audit
    13. Risk Assessment
    14. Employee Interviews
    15. Audit Report
    16. Procurement System Review
    17. Compensation System Audit
    18. Reasonableness of Compensation
    19. Uncompensated Overtime
    20. Price Proposal Review
    21. Developing Cost Estimates
    22. Auditor Approaches
    23. Incurred Cost Audit
    24. Labor Costs
    25. Material and Subcontract Costs
    26. Indirect Costs
    27. Other Direct Costs
    28. Postaward Review (Defective Pricing)
    29. Audit Emphasis
    30. Applicability of the Truth in Negotiations Act
    31. Price Reduction
    32. Fraud in Defective Pricing
    33. Audit Techniques
    34. Cost Accounting Standards
    35. Disclosure Statement
    36. Changes in Cost Accounting Practices
    37. Contract Termination Audit
    38. Equitable Contract Price Adjustment Audit
    39. Financial Capability Audit
    40. Operations Audit
    41. Material Management And Accounting System
    42. DCAA Contract Audit Manual
  20. Acronyms
  21. Index