Thursday, December 31, 2009

Facilities Capital Cost of Money (FCCM)

Cost Accounting Standards 414 and 417 allow contractors to recover facilities capital cost of money under their Government contracts. These CAS Standards have been incorporated into FAR 31.205-10 so as to apply to all contractors, regardless of their level of CAS coverage. Contractors with investments in property, plant, and equipment should not overlook these imputed costs. In order to claim these costs, FCCM must have been included in the initial pricing proposal. We have seen cases where contractors failed to propose FCCM and were later precluded from billing them becasue they were not initially proposed. The computation of the FCCM rate(s) is not complex but is beyond the scope of this post. The FCCM rate changes every six months, January 1st and July 1st. The current rate (as well as historical rates) can be found on the Treasury's website. Note that this site does not refer to Facilities Capital Cost of Money but rather to Prompt Payment Act Interest Rates. The FCCM rates are the same as the Prompt Payment Act rates. CAS and FAR require that the interest rate be based on the rates determined by the Secretary of the Treasury, pursuant to Public Law 92-41 (Prompt Payment Act).

For your convenience, we have included a permanent link to the FCCM rates on our resources page.

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