subpart 230.70--facilities capital employed for facilities
in use
230.7000 Contract facilities
capital estimates.
230.7001 Use of DD Form 1861.
230.7001-1 Purpose.
230.7001-2 Completion
instructions.
230.7003 Postaward facilities
capital applications.
230.7003-1 Interim billings
based on costs incurred.
230.7003-2 Final settlement.
230.7004 Administrative procedures.
230.7004-1 Forms CASB-CMF.
230.7004-2 DD Form 1861.
230.7000 Contract facilities
capital estimates.
(a) The contracting officer will 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; and
(2) DD Form 1861, Contract Facilities Capital Cost of Money.
230.7001 Use of DD Form 1861.
230.7001-1 Purpose.
The DD Form 1861 provides a means of linking the Form CASB-CMF and DD Form 1547, Record of Weighted Guidelines Application. It—
(a) 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.
(b) Is designed to record and compute the contract facilities capital cost of money and capital employed which is carried forward to DD Form 1547.
230.7001-2 Completion
instructions.
Complete a DD Form 1861 only after evaluating the contractor's cost proposal, establishing cost of money factors, and establishing a prenegotiation objective on cost. Complete the form as follows:
(a) List overhead pools and direct-charging service centers (if used) in the same structure as they appear on the contractor's cost proposal and Form CASB-CMF. The structure and allocation base units-of-measure must be compatible on all three displays.
(b) Extract appropriate contract overhead allocation base data, by year, from the evaluated cost breakdown or prenegotiation cost objective and list against each overhead pool and direct-charging service center.
(c) Multiply each allocation base by its corresponding cost of money factor to get the facilities capital cost of money estimated to be incurred each year. The sum of these products represents the estimated contract facilities capital cost of money for the year's effort.
(d) Total contract facilities cost of money is the sum of the yearly amounts.
(e) Since the facilities capital cost of money factors reflect the applicable cost of money rate in Column 1 of Form CASB-CMF, divide the contract cost of money by that same rate to determine the contract facilities capital employed.
230.7002 Preaward facilities capital applications.
To establish cost and price objectives, apply the facilities capital cost of money and capital employed, as determined under 230.7000, as follows:
(a) Cost of Money.
(1) Cost Objective. Use the imputed facilities capital cost of money, with normal, booked costs, to establish a cost objective or the target cost when structuring an incentive type contract. Do not adjust target costs established at the outset even though actual cost of money rates become available during the period of contract performance.
(2) Profit Objective. When measuring the contractor's effort for the purpose of establishing a prenegotiation profit objective, restrict the cost base to normal, booked costs. Do not include cost of money as part of the cost base.
(b) Facilities Capital Employed. Assess and weight the profit objective for risk associated with facilities capital employed in accordance with the profit guidelines at 215.404-71-4.
230.7003 Postaward facilities
capital applications.
230.7003-1 Interim billings
based on costs incurred.
(a) The contractor may include contract facilities capital cost of money in cost reimbursement and progress payment invoices. To determine the amount that qualifies as cost incurred, multiply the incurred portions of the overhead pool allocation bases by the latest available cost of money factors. These cost of money calculations are interim estimates subject to adjustment.
(b) As actual cost of money factors under CAS 414 and FAR 31.205-10 are finalized, use the new factors to calculate contract facilities cost of money for the next accounting period.
230.7003-2 Final settlement.
(a) Contract facilities capital cost of money for final cost determination or repricing is based on each year's final cost of money factors determined under CAS 414 and supported by separate Forms CASB-CMF.
(b) Separately compute contract facilities cost of money in a manner similar to yearly final overhead rates. Also like overhead costs, include in the final settlement an adjustment from interim to final contract cost of money. Do not, however, adjust estimated or target cost.
230.7004 Administrative procedures.
230.7004-1 Forms CASB-CMF.
(a) Forms CASB-CMF are normally initiated by the contractor under the same circumstances as Forward Pricing Rate Agreements (see FAR Subpart 42.17) and evaluated as complementary documents and procedures.
(b) Separate forms are required for each prospective cost accounting period of contract performance.
(c) The contractor may submit annually or with individual contract price proposals, as agreed with the administrative contracting officer (ACO).
(d) The contractor must submit a final form under CAS 414 as soon as possible after the end of each accounting period, together with a proposal for actual overhead costs and rates.
230.7004-2 DD Form 1861.
(a) The contracting officer may ask the ACO to complete the forms as part of field pricing support.
(b) When the Weighted Guidelines Method is used, completion of the DD Form 1861 requires information not included on the Form CASB-CMF, i.e., distribution percentages of land, building, and equipment for the business unit performing the contract. Choose the most practical method for obtaining this information, for example—
(1) Contract administration offices could obtain the information through the process used to establish factors for facilities capital cost of money or could establish advance agreements on distribution percentages for inclusion in field pricing reports;
(2) The corporate ACO could obtain distribution percentages; or
(3) The contracting officer could request the information through a solicitation provision.