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June 07, 2013

CAS kicks in at $700,000.00

In a nutshell, CAS provides the government with a way to make some sort of sense out of the creative arithmetic government contractors use when they price FAR Part 15 proposals. FAR Part 15 pricing doesn't exist as a constant in real life. It's at best a flexible kind of conceptual mathematics. FAR 15 pricing comes into being when government contractors apply theoretical variables to floating numerical data, calculate fee based on a percentage of those imaginary costs, and forward to the government for award. 

If you think I'm being hyperbolic, look at the process of rate variance. If indirect burdening wasn't a theoretical process, then why would the government allow rate variance calculations? The government isn't in the habit of giving away money post-award, but even COs have to acknowledge that, from a mathematical perspective, rates are only reliable within a range.  

CAS is the government's attempt to hold large business contractors to some sort of unified theory of cost development among the wildly theoretical methods available - Standards. With CAS, at least the government can hold your proposal up against what you've communicated as your commitment to standardized calculations and say, "Okay, close enough" .