CAS 401 Consistency in Estimating Accumulating Reporting Costs. Provision of the week: CAS 401-50(a) {48 CFR 9904.401-50(a)}
Provision: The level of detail in estimating shall be such that any significant cost can be compared with the actual cost accumulated and reported.
Example of a Compliant Practice:
The contractor estimates direct labor costs using average labor categories. The accounting system provides a crosswalk that shows which employees are included in each labor category, and the computations of the averages. The contractor accumulates and reports (bills on invoices) based on actual labor costs paid to employees that worked on the contract. This is in compliance with the contract because the estimating can be compared to the actual cost accumulation/reporting. The average rates can be broken down to show the individual employee labor rates which can then be compared to the actual labor rates paid to those employees. In addition, the hours worked can also be compared by totaling the hours worked by each employee in each category, and comparing that to the estimated hours for each labor category.
Example of a Noncompliant Practice:
The contractor estimates engineering costs for the proposal by function: General Engineering, Test Engineering, and Design Engineering. During contract performance, the contractor accumulates engineering costs by category, Level I, Level II, and Level III. Due to the inconsistency between how the costs are estimated (by function) and how they are accumulated (by category), the contractor is unable to compare the estimated costs with the accumulated costs. As a result, this practice is in noncompliance with the requirement that the level of detail in estimating shall be such that any significant cost can be compared with the actual cost accumulated and reported.