The Code of Federal Regulations of the United States of America

This format shall not be printed, reproduced, or stocked by agencies and shall be used only as a guide for individual preparation.

(b) Page 2 of Format 1301.

INSTRUCTIONS FOR FORMAT 1301 CONTRACT FACILITIES CAPITAL AND COST OF MONEY Purpose. The purpose of this format is to compute the estimated facilities capital to be employed for a specific contract proposal. An intermediate step is to compute the estimated facilities capital cost of money, using the Facilities Capital Cost of Money Factors developed on Form(s) CASB-CMF. This procedure is intended to be fully compatible with Cost Accounting Standard 414 "Cost of Money as an Element of the Cost of Facilities Capital," and extend those criteria and techniques to prospective periods for forward pricing purposes. FPR § 13.1301 should be referred to for applicability and further explanation.

Identification.

Identify the contractor, business unit and address. Identify the specific RFP or contract to which the computation pertains. Identify the estimated performance period of the contract.

Overhead pools (Col. 1). List all business unit overhead pools and direct-charging service/support centers whose costs will be allocated to this contract. The structure must be compatible with contractor's cost proposal and Form(s) CASB-CMF.

Cost accounting period (Col. 2). This column is used only for the "projected" method of estimating contract facilities capital employed and cost of money. Each Overhead Pool listed must be further broken down by each Cost Accounting Period impacted by the Performance Period of the contract. The yearly breakdown must also correspond to yearly overhead allocation bases in the contractor's cost proposal, and to separate Forms CASB-CMF for each year listed. If the "historical" method is used, the column should be ignored.

Contract overhead allocation base (Col 3.). For each Overhead Pool and Cost Accounting Period listed, record the same Contract Overhead Allocation Base amounts used to derive the pre-negotiation cost objective. Such amounts should be the same as those used for burdening contract overhead or applying service/support center use charges. The base units-of-measure must agree with those used on the Form(s) CASB-CMF.

Facilities capital cost of money factors (Col. 4). Carry forward the appropriate estimated Facilities Capital Cost of Money factors from the Form(s) CASB-CMF. Business units, overhead pools and cost accounting periods must agree.

Facilities capital cost of money amount (Col. 5). The product of each Contract Overhead Allocation Base (Col. 3) multiplied by

its related Facilities Capital Cost of Money Factor (Col. 4).

Contract facilities capital cost of money (Line 6). The sum of Col. 5. This represents the contract's allocable share of the business unit's estimated cost of money for the cost accounting period(s) impacted by the contract performance period. Therefore it represents a portion of the total(s) of Col. 5 of Form CASB-CMF.

Facilities capital cost of money rate (Line 7). The same Cost of Money Rate used in Col. 1 of the Form(s) CASB-CMF. Only one rate will be used in the facilities capital estimating process regardless of the length of the contract performance period.

Contract facilities capital employed (Line 8). The quotient of Line 6 divided by Line 7. This represents the contract's allocable share of the business unit's estimated facilities value for the cost accounting period(s) impacted by the contract. Therefore it represents a portion of the total(s) of Col. 4 of Form CASB-CMF.

§ 1-3.1302 Cost of money for capital employed on capital assets under construction.

§ 1-3.1302-1 Policy.

(a) It is Government policy to recognize a contractor's investment in capital assets while these are being constructed, fabricated, or developed for the contractor's own use (see § 115.205-51(b)). This recognition is made through the allowance of an imputed cost of money amount which is (1) calculated in accordance with Cost Accounting Standard (CAS) 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (see § 1-3.1220-17), and the instructions in § 1-3.1302-3, (2) capitalized along with the other costs of the asset for which the investment is made, and (3) allocated to Government contracts in accordance with § 1-3.1302-4.

§ 1-3.1302-2 Definitions.

The following definitions have been taken or developed from CAS 417 which is reprinted in § 1-3.1220-17.

(a) Intangible capital asset. An asset that has no physical substance, more than minimal value, and is expected to be held by an enterprise for continued use or possession beyond the current accounting period for the benefit it yields.

(b) Tangible capital asset. An asset that has physical substance, more than minimal value, and is expected to be held by an enterprise for continued use or possession beyond the current accounting period for the service it yields.

(c) Cost of money rate. The cost of money rate is either the interest rate determined by the Secretary of the Treasury under Pub. L. 92-41 (85 Stat. 97), or the time-weighted average of such rates for each cost accounting period during which the asset is being constructed, fabricated, or developed. The time-weighted average interest rate is calculated by multiplying the various rates in effect during the months of construction by the number of month(s) each rate was in effect. The sum of the products is divided by the total number of months in which the rates were experienced.

(d) Representative investment. The representative investment is the calculated amount considered invested by the contractor in the project to construct, fabricate, or develop the asset during the cost accounting period. In calculating the representative investment, consideration must be given to the rate or expenditure pattern of the investment, i.e., if most of the investment was at the end of the cost accounting period, the representative investment calculation must reflect this fact.

(1) If the contractor experiences an irregular or uneven expenditure pattern in the construction, fabrication, or development of a capital asset, i.e., a majority of the construction costs were incurred toward the beginning, middle, or end of the cost accounting period, the contractor must either:

(i) Determine a representative investment amount for the cost accounting period by calculating the average of the month-end balances for that cost accounting period, or

(ii) Treat month-end balances as individual representative investment

amounts.

(2) If the construction, fabrication, or development costs were incurred in a fairly uniform expenditure pattern throughout the construction period, the contractor may:

(i) Determine a representative investment amount for the cost accounting period by averaging the beginning and ending balances of the construction, fabrication, or development cost account for the cost accounting period; or

(ii) Treat month-end balances as individual representative investment amounts.

§ 1-3.1303-3 Measurement.

(a) The imputed cost of money for an asset under construction, fabrication, or development is calculated by applying a cost of money rate (see § 13.1302-2(c)), to the representative investment amount (see § 1-3.1302-2(d)).

(1) When a representative investment amount is determined for a cost accounting period in accordance with § 1-3.1302-2(d)(1)(i) or § 1-3.13022(d)(2)(i), the cost of money rate used shall be the time-weighted average rate.

(2) When a monthly representative investment amount (see § 1-3.13022(d)(1)(ii) or § 1-3.1302.2(d)(2)(ii)) is used, the cost of money rate shall be the rate in effect each month. (NoteUnder this method, the cost of money calculation is made monthly and the total for the cost accounting period is the sum of the monthly calculations.)

(b) The method chosen by a contractor for determining the representative investment amount may be different for each capital asset being constructed, fabricated, or developed as long as the method fits the expenditure pattern of the construction costs incurred.

(c) The imputed cost of money will be capitalized only once in any cost accounting period, either at the end of the period or at the end of the construction period, whichever

first.

comes

(d) When the construction of an asset takes more than one cost accounting period, the cost of money capitalized for the first cost accounting period will be included in determining the representative investment amount for any future cost accounting periods.

§ 1-3.1302-4 Composition and allocation of costs.

(a) The cost of money for a tangible capital asset determined in accordance with §§ 1-3.1302-2 and 1-3.1302-3 shall be capitalized along with the other construction, fabrication, or development costs of that asset for purposes of depreciation under § 1-15.205-9.

(b) The cost of money for an intangible capital asset determined in accordance with §§ 1-3.1302-2 and 1-3.1302-3 shall be capitalized along with other construction, fabrication, or development costs of that asset and amortized over appropriate cost accounting periods.

(c) Where CAS 414 cost of money is allocated to construction, fabrication, or development effort in accordance with § 1-3.1301, it will be recognized and considered an element of total construction costs and be included in all calculations of the asset's representative investment amount.