Facilities Capital Cost of Money (FCCM) is an imputed return on the capital assets a contractor has invested in its business — recognized as an allowable contract cost under FAR 31.205-10 and computed under CAS 9904.414. It is the only major cost in the FAR/CAS framework that is calculated rather than incurred: there is no journal entry, no cash transaction, and no impact on book income. Cost of money is reported on Schedule F of the incurred cost proposal and on DD Form 1861 for forward-pricing actions, and it is an allowable cost only if the contractor actually claims it — the government will not add it for you.
What Cost of Money Is (and Why the Regulations Allow It)
Cost of money recognizes that capital invested in productive assets has an opportunity cost, even when no interest is paid. A contractor who financed production equipment from retained earnings is in the same economic position as a contractor who borrowed to buy the same equipment — but only the borrower's interest would otherwise hit the cost books. CAS 414 levels the field by imputing a return on the net book value of facilities capital and treating that imputed return as an allowable contract cost. FAR 31.205-10 adopts CAS 414 by reference and makes the resulting cost of money allowable on government contracts.
The CAS 414 Formula: NBV × Treasury Rate, Allocated by Pool
The computation is straightforward. For each indirect pool (overhead, G&A, and any intermediate pools such as occupancy), take the average net book value of the facilities capital assigned to that pool during the fiscal year, multiply by the applicable Treasury rate, and you get the cost-of-money allocation for that pool. Divide each pool's cost-of-money allocation by the same allocation base used for the indirect rate (total cost input for G&A, direct labor or another base for overhead), and you get a separate cost-of-money factor that is applied alongside the indirect rate on each contract. This is the calculation that Schedule F and Schedule F-1 of the ICP are designed to document.
The Treasury Rate — Fixed, Semi-Annual, and Non-Negotiable
The rate used to impute cost of money is the Treasury Prompt Payment Act rate, published semi-annually by the Secretary of the Treasury. Per CAS 9904.414-50(b), contractors must use the arithmetic mean of the two semi-annual rates in effect during the fiscal year — using only one half-year rate produces an incorrect FCCM and is an easy DCAA finding. The rate is set by the government and is not negotiable; contractors do not propose their own borrowing rates or weighted-average cost of capital for this purpose.
Schedule F and Schedule F-1: Documenting FCCM in the ICP
Schedule F of the incurred cost proposal summarizes the cost of money allocable to each indirect pool — showing the average NBV from Schedule F-1, the weighted Treasury rate for the fiscal year, the allocation to each pool, and the resulting cost-of-money factor that is applied alongside the indirect rate. Schedule F-1 is the supporting detail: the beginning-of-year and end-of-year net book values of the capital assets assigned to each pool, the average NBV computed from those values, and the tie-out to the contractor's fixed-asset register. Together, Schedules F and F-1 give DCAA everything it needs to verify the computation — the assets, the rate, the allocation, and the arithmetic.
Not an Accounting Entry — and Not in the G&A Base
Cost of money is not booked to the general ledger. It does not appear on the income statement, the trial balance, or in any account in the chart of accounts. It is computed separately each fiscal year and added to the indirect pools only for the purpose of claiming it on government contracts. Just as importantly, cost of money is not included in the G&A base under CAS 410, and it is not subject to profit or fee limitations under FAR 15.404-4. It is a distinct factor applied on Schedule H alongside the indirect rates, not a cost that flows through the normal allocation mechanics.
CAS 414 vs. CAS 417 — Assets in Use vs. Under Construction
Two CAS standards address cost of money, and they cover different situations. CAS 414 applies to capital assets in productive use — the equipment, buildings, and capitalized software sitting in your fixed-asset register and depreciating. The resulting cost of money is treated as an allowable contract cost and reported on Schedule F. CAS 417 applies to capital assets under construction — a manufacturing facility being built, custom test equipment being fabricated, or capitalized internal software still in development. CAS 417 cost of money is capitalized into the cost basis of the asset and recovered through depreciation once the asset is placed in service. For most small and mid-size contractors, only CAS 414 applies.
DD Form 1861 — Cost of Money in Forward Pricing
DD Form 1861 is the Department of Defense Facilities Capital Cost of Money form used on pricing actions. It carries the cost-of-money factors computed under CAS 414 — the same ones that appear on Schedule F of the ICP — into forward-pricing proposals and contract negotiations. Contracting officers rely on DD 1861 to verify that the FCCM being proposed on a specific contract ties back to the contractor's most recent CAS 414 computation. If you claim FCCM on a cost-reimbursement or flexibly priced bid without a supporting DD 1861, expect questions.
You Have to Claim It — the Government Will Not Add It
FAR 31.205-10 makes cost of money allowable, but the contractor must actually claim it. If FCCM is not included in your forward-pricing proposal, your provisional billing rates, or your incurred cost submission, you forfeit it for that fiscal year. There is no retroactive credit and no government-initiated adjustment — this is a use-it-or-lose-it cost. For contractors with meaningful capital investment, the annual FCCM can run into six or seven figures, and the single most common cost-of-money mistake is simply not claiming the amount to which the contractor is already entitled.
How to Compute FCCM in the ICP Dashboard
Claiming cost of money is a three-step workflow: identify the assets, capture the rate, allocate by pool. The ICP Dashboard automates the math so you supply only the inputs: (1) the beginning-of-year and end-of-year net book values of capital assets assigned to each indirect pool, sourced from your fixed-asset register; (2) both semi-annual Treasury rates in effect during the fiscal year — the dashboard computes the arithmetic mean automatically per CAS 9904.414-50(b); and (3) confirmation of which pool each asset group supports. The dashboard produces Schedule F and Schedule F-1 with the correct weighting, the correct pool allocations, and a tie-out to the ICP rate computation.
Common FCCM Mistakes DCAA Looks For
Several recurring errors appear in DCAA reviews of Schedule F. Using only one half-year's Treasury rate instead of the arithmetic mean of both is an easy finding. Including non-productive or unallowable assets (idle facilities, FAR 31.205-6 executive perquisites, leased assets not on the contractor's books) in the NBV base. Allocating cost of money to the wrong pool — for example, assigning production equipment to G&A instead of overhead — which distorts the factors applied to contracts. Failing to reconcile Schedule F-1 to the fixed-asset register. And, most commonly, omitting FCCM entirely and leaving allowable cost on the table.
The interactive guide below walks through cost of money end to end — what it is, why it is imputed, how CAS 414 computes it, how Schedule F and DD 1861 document it, how CAS 417 differs, and exactly where to click in the ICP Dashboard to produce the supporting schedules.