Cost Estimating is a fundamental requirement of government contract accounting. Preparing accurate and reliable cost estimates when bidding on contracts is critical to being a successful government contractor. The root cause of the losses on many contracts is a poor cost estimate in the initial proposal.
Also, contractors must adhere to the FAR and CAS requirements (to the extent they apply), which implement the principles of Cost Estimating. For example, CAS 401 requires that practices used in estimating costs in the pricing of a proposal are consistent with the cost accounting practices for accumulating and reporting costs at the time of agreement on price. In other words, the way in which a contractor estimates costs must be consistent with how they account for costs. Costs may be accumulated at a greater detail than estimated but cannot be estimated at a greater detail than a contractor can actually account for costs.
Contractors must also comply, when applicable, with the requirements of the Truthful Cost or Pricing Data Act (formerly: Truth in Negotiations Act (TINA)). TINA requires that, during the negotiating process, but no later than the date of agreement on price, the contractor must disclose to the Government or the upper tier contractor all relevant cost or pricing data and certify that such data is accurate, complete and current as of the date of agreement on price.
CGS is well versed in cost estimating including many of the pitfalls that result in poor cost estimates. Through our expertise we can help to ensure that your company is in compliance with the FAR and CAS related to cost estimating. We’ve successfully guided many of our existing clients through Defense Contract Audit Agency (DCAA) estimating system audits (DFARS 252.215-7002).
Please contact us for more information on how we can assist you.