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Hi,

A question/clarification regarding the inclusion of intercompany costs in various indirect bases.  In this example, there are two organizations within the company (we'll call them A and B).  Organization A performs the work (all labor); and fully burdened costs, including fringe, overhead and G&A are transferred to a project in Organization B.  Those costs are received by Organization B as subcontract costs and burdened with G&A.  Is there a requirement to exclude the costs from the bases of either organization to avoid double counting?  Are there specific CAS clauses that address this?  In reading through CAS 8.410, it appears that there is specific guidance that they should NOT be excluded from the performing organization's base (8.410.2.a).  But I haven't seen anything that addresses the applicability in the base of the receiving organization.  

Thanks for your input.

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  • 2 weeks later...

Are you a contractor or a government buyer?  What is the G&A base for the selling or buying entity?  (Total Cost Input, Value-added, single element?)  We need more information to be able to help you.   Also, it appears you are looking at the DCAA Contract Audit Manual.  CAS 410 can be accessed at https://www.acquisition.gov/chapter_99/part-9904-cost-accounting-standards.

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On 1/6/2021 at 8:35 AM, CASNEWB said:

A question/clarification regarding the inclusion of intercompany costs in various indirect bases.  In this example, there are two organizations within the company (we'll call them A and B).  Organization A performs the work (all labor); and fully burdened costs, including fringe, overhead and G&A are transferred to a project in Organization B.  Those costs are received by Organization B as subcontract costs and burdened with G&A.  Is there a requirement to exclude the costs from the bases of either organization to avoid double counting?  Are there specific CAS clauses that address this?  In reading through CAS 8.410, it appears that there is specific guidance that they should NOT be excluded from the performing organization's base (8.410.2.a).  But I haven't seen anything that addresses the applicability in the base of the receiving organization.  

 

I believe this Defense Acquisition University (DAU) article may lead you to your own conclusion. https://www.dau.edu/aap/pages/ArticleContent.aspx?itemid=18146

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1 hour ago, Neil Roberts said:

I believe this Defense Acquisition University (DAU) article may lead you to your own conclusion. https://www.dau.edu/aap/pages/ArticleContent.aspx?itemid=18146

As many WIFCON posters and readers know, when you review Ask a Professor responses, caveat emptor.

 

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I will add that govtacct02 asked pertinent questions, the answers to which are required for a good response to the OP. The fact that almost two weeks have passed with no response to those questions is disappointing.

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