CAS Offsetting FFP and Flexible

[joan]

contemplating a cost accounting practice change.

Changed in CAP Scenario contemplated is over five year period would result in same expense at the end of the five years.  Net would be zero increased costs in aggregate

However change in measurement would case more costs to be incurred in the current periods and lesser in subsequent periods.   

 GDM offsets would be appropriate because FP increased costs - - lower costs to Government, and Flexibly-priced contracts increase - - higher cost to Government

Thoughts?

thanks

[here_2_help]

I'm confused.

If the net cost impact after 5 years is zero, then the cost impact is zero. Right?

If the net cost impact shows cost-type increase but offset by FP increase, then the net cost impact may be zero. Or it may not be, according to the ASBCA (Raytheon).

Other than the thoughts expressed above, what are you looking for?

[Gnatman]

The contract universe in the segment would have to have some contracts with a period of performance that includes 5 years out.  That is not probable.  Therefore, the offsets don't exist for the Admin of CAS Clause.

[here_2_help]

1 hour ago, Gnatman said:

The contract universe in the segment would have to have some contracts with a period of performance that includes 5 years out.  That is not probable.  Therefore, the offsets don't exist for the Admin of CAS Clause.

I don't understand your point. In a DCI the impacts are calculated using individual contract Estimates-at-Completion (EACs). If Joan is calculating "zero increased costs in the aggregate" at the end of 5 years then she's using EACs. Period. Probability is irrelevant. You'll note she has time-phased the impacts and knows that the net cost impact changes year-by-year.

I grant you Joan may be using imprecise terminology, but who knows? That's why I responded with "I'm confused."

In any case, Joan seems to have left the building long ago. It's probable that she has found her answer(s) somewhere else.