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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: August 9, 2000

FROM: Barry McVay, CPCM

SUBJECT: Cost Accounting Standards Board; Comprehensive Review of Cost Accounting Standards (CAS)

SOURCE: Department of Defense; Public Meetings on Cost Accounting Standards (CAS) Administration and Streamlining

SOURCE: Defense Cost, Pricing and Finance Directorate Web Page at http://www.acq.osd.mil/dp/cpf, August 4, 2000.

AGENCIES: Department of Defense (DOD)

ACTION: Notice of Public Meetings

SYNOPSIS: The Office of the Director of Defense Procurement, in conjunction with the National Contract Management Association (NCMA), held public meetings on August 2 and 3, 2000, to discuss the April 18, 2000, proposed Federal Acquisition Regulation (FAR) rule on CAS administration, and to discuss potential areas for CAS streamlining. Based on those meetings, additional public meetings will be held on August 23 and 24, 2000.

EDITOR'S NOTE: The CAS are 19 standards which apply to large contractors performing large contracts. The CAS are in Chapter 99 of Title 48 of the Code of Federal Regulations (CFR) and are included as an appendix to the paper-version of the FAR for information purposes. They are available on the Internet at http://www.arnet.gov/far/97/html/appendix.html.

For more on the proposed FAR rule on CAS administration, see the April 18, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Cost Accounting Standards Administration."

For more on the announcement of the August 2 and 3, 2000, meetings, see the July 19, 2000, FEDERAL CONTRACTS DISPATCH "Department of Defense; Public Meetings on Cost Accounting Standards (CAS) Administration and Streamlining the CAS."

DATES: The meeting to discuss potential CAS streamlining will be held August 23, 2000, from 9:00 a.m. to 4:00 p.m. at NCMA. The meeting to discuss the proposed FAR rule will be held August 24, 2000, from 9 a.m. to 4 p.m. at NCMA. The dates and times of subsequent public meetings will be published by the Defense Office of Cost, Pricing, and Finance at http://www.acq.osd.mil/dp/cpf.

ADDRESSES: The meetings will be held at the NCMA, 1912 Woodford Drive, Vienna, VA 22182. Directions may be found on the Internet at http://www.acq.osd.mil/dp/cpf/ncmadir.doc.

FOR FURTHER INFORMATION CONTACT: Mr. David Capitano, Office of Cost, Pricing, and Finance, 703-695-9764, fax: 703-693-9616, e-mail: capitadj@acq.osd.mil.

SUPPLEMENTAL INFORMATION: On April 18, 2000, a proposed rule was published that would amend FAR Subpart 30.6, CAS Administration, to more clearly and completely explain the cost-impact process that the government and contractor must follow when a contractor makes a compliant change to a cost accounting practice or follows a noncompliant practice.

The Director of Defense Procurement wanted to hear the views of interested parties on what they believe to be the key issues pertaining to the proposed rule, so the Director scheduled a meeting on August 2 and DOD developed a list of possible issues for discussion (the list is available at http://www.acq.osd.mil/dp/cpf/part30.doc). Based on the meeting, a revised list of issues has been prepared for the next meeting, scheduled for August 24 (the revised list is available at http://www.acq.osd.mil/dp/cpf/part30aug2.doc).

In addition, the Director held a meeting on August 3 to hear the views of interested parties regarding any CAS that present streamlining opportunities (elimination, revision, and/or amendment). DOD developed a list of possible streamlining areas for discussion (it is available at http://www.acq.osd.mil/dp/cpf/casbaseline.doc). Based on the meeting, a revised list of possible streamlining areas has been developed for the next meeting, scheduled for August 23 (the revised list is at http://www.acq.osd.mil/dp/cpf/casstreamliningaugust3.doc).

The following are the CAS that were identified for potential elimination at the August 3 meeting:

CAS 404Capitalization of Tangible Assets
CAS 405Accounting for Unallowable Costs
CAS 406Cost Accounting Period
CAS 407Use of Standard Costs for Direct Material and Direct Labor
CAS 408Accounting for Costs of Compensated Personal Absence
CAS 409Depreciation of Tangible Capital Assets
CAS 411Accounting for Acquisition Costs of Material
CAS 417Cost of Money as an Element of the Cost of Capital Assets Under Construction
CAS 420Accounting for Independent Research and Development Costs and Bid and Proposal Costs (IR&D/B&P)

The following are the CAS that were identified for potential revision at the August 3 meeting:

CAS 401Consistency in Estimating, Accumulating and Reporting Costs
CAS 402Consistency in Allocating Costs Incurred for the Same Purpose
CAS 403Allocation of Home Office Expenses to Segments
CAS 410Allocation of Business Unit General and Administrative Expenses to Final Cost Objectives
CAS 412Composition and Measurement of Pension Cost
CAS 413Adjustment and Allocation of Pension Cost
CAS 414Cost of Money as an Element of the Cost of Facilities Capital
CAS 415Accounting for the Cost of Deferred Compensation
CAS 416Accounting for Insurance Costs
CAS 418Allocation of Direct and Indirect Costs

Some other issues identified were:

EDITOR'S NOTE: Today, the Cost Accounting Standards Board (CASB) invited the public to comment on how it should proceed with its comprehensive review of the CAS, since it has the "exclusive authority to make, promulgate, amend, and rescind cost accounting standards and interpretations." After the CASB reviews the comments, it will schedule a public meeting "to discuss its detailed plan for accomplishing the comprehensive review." Undoubtedly, DOD will be there to provide the CASB the results of its meetings! For more on the CASB announcement, see today's FEDERAL CONTRACT DISPATCH "Cost Accounting Standards Board; Comprehensive Review of Cost Accounting Standards."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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