FAR 52.215-16 is the solicitation provision that lets a government contractor recover Facilities Capital Cost of Money (FCCM), an imputed return on the capital tied up in buildings and equipment used on the contract. To claim it, you must specifically identify the estimated amount in your cost proposal and compute it under Cost Accounting Standard 414. Leave it out of the offer, and the contract will carry FAR 52.215-17 waiving the cost for the life of that contract.
When the Provision Shows Up in Your Solicitation
Contracting officers are required to include FAR 52.215-16 in any solicitation expected to result in a contract subject to the cost principles for commercial organizations under FAR Subpart 31.2.1Acquisition.GOV. FAR 15.408 – Solicitation Provisions and Contract Clauses That covers most negotiated contracts where the government performs cost analysis: cost-reimbursement contracts, many time-and-materials contracts, and fixed-price contracts priced from cost data.
One boundary catches smaller contractors off guard. CAS 414 compliance is not limited to contracts formally “CAS-covered.” FAR 31.205-10 makes the CAS 414 methodology applicable whenever the cost principle is used, regardless of whether the contractor meets the dollar thresholds for full or modified CAS coverage.2Acquisition.GOV. FAR 31.205-10 – Cost of Money A contractor otherwise exempt from CAS still has to follow CAS 414’s measurement rules to claim FCCM.
What You Have to Do to Claim FCCM
The provision itself makes FCCM allowable only if the contractor meets the criteria in FAR 31.205-10(b).3Acquisition.GOV. 48 CFR 52.215-16 – Facilities Capital Cost of Money Three requirements do the work.
First, propose it in your offer. The estimated FCCM must be specifically identified and included in the cost proposal for the contract under which you intend to claim it. This is not optional, and it cannot be added after award.2Acquisition.GOV. FAR 31.205-10 – Cost of Money
Second, follow CAS 414. The cost has to be measured, assigned, and allocated to the contract in accordance with 48 CFR 9904.414, which requires facilities capital to be separately computed for each contract using cost of money factors developed for each cost accounting period.4eCFR. 48 CFR 9904.414-40 – Fundamental Requirement Failing to compute your cost of money factors under CAS 414 is treated as a violation of the standard even if you ultimately decide not to propose the cost on a particular contract. Your accounting system has to consistently produce the same data for costing, estimating, and calculating FCCM factors.
Third, respect the asset valuation rules after any business combination. Depreciation and cost of money must be based on the asset values measured under CAS 404 rather than any inflated purchase-price allocations, and intangibles are capped at the amounts that would have been allowed if the combination had never happened.5Acquisition.GOV. FAR 31.205-52 – Asset Valuations Resulting From Business Combinations
How the Calculation Works
FCCM has three moving parts. Get one wrong and the whole claim falls apart.
Net Book Value of Facilities Capital
Start with the contractor’s investment in tangible capital assets: buildings, machinery, equipment, and leased property that qualifies under CAS 414. For each asset, subtract accumulated depreciation from the original acquisition cost to get net book value, computed for each indirect cost pool that carries a meaningful allocation of facilities capital. Net book values are averaged over the cost accounting period rather than taken as a single-day snapshot. Assets that do not generate allowable depreciation or amortization stay out of the base.
Treasury Cost of Money Rate
CAS 414 requires the cost of money rate to be based on rates determined by the Secretary of the Treasury under Public Law 92-41.4eCFR. 48 CFR 9904.414-40 – Fundamental Requirement Treasury publishes the rates semi-annually, and contractors apply the rate in effect during the relevant cost accounting period. The rate is uniform across all contractors, so nothing about this component is negotiable.
Allocation to the Contract
Multiply the net book value of facilities capital in each indirect cost pool by the Treasury rate to get the total dollar amount of cost of money for that pool. Divide that dollar amount by the pool’s allocation base (the same base used for overhead generally) to produce a cost of money factor. Apply that factor to the contract’s share of the allocation base, and the result is the FCCM attributable to the contract. The pool-by-pool approach ties the imputed cost to how the contractor actually uses its facilities instead of spreading it evenly across all work.
Documenting It on Form CASB-CMF
Contractors record and compute their FCCM factors on Form CASB-CMF (Facilities Capital Cost of Money Factors Computation), the standard format prescribed in the appendix to CAS 414.6GovInfo. 48 CFR 9904.414-63 – Appendix A, Form CASB-CMF The form captures the contractor name, business unit, cost accounting period, and applicable Treasury rate, then walks through the math pool by pool: total net book value, allocation base for the period, resulting cost of money factor, and final FCCM amount. Entries are broken out by category, including leased property, corporate or group allocations, and distributed versus undistributed amounts. It is the first document a DCAA auditor will pull when reviewing your claim, so it needs to be consistent with the rest of your cost submissions.
The Profit Tradeoff
Claiming FCCM is not free money. Under the Department of Defense weighted guidelines method for establishing profit objectives, cost of money is deliberately excluded from the cost base used to calculate the contractor’s profit.7Acquisition.GOV. DFARS 215.404-71-4 – Facilities Capital Employed The contracting officer adds FCCM to the cost objective when building the total price but restricts the profit calculation to normal, booked costs.
The practical effect is that FCCM partially offsets what would otherwise be a higher profit rate. Contractors with heavy capital investment recover some of their carrying cost through FCCM, but the profit percentage on top of it will not stay unchanged. On incentive-type contracts, target costs set at the outset using FCCM are not adjusted later when actual cost of money rates become available during performance.7Acquisition.GOV. DFARS 215.404-71-4 – Facilities Capital Employed
What Happens If You Do Not Propose It
If FCCM is not included in the offer, the resulting contract will incorporate FAR 52.215-17, “Waiver of Facilities Capital Cost of Money.” The clause is short and final: the contractor did not propose the cost, so it is unallowable under the contract.8Acquisition.GOV. 48 CFR 52.215-17 – Waiver of Facilities Capital Cost of Money There is no mechanism to add it after award.
That makes the proposal stage the single critical decision point. If you are unsure whether FCCM will be material, propose it anyway. The waiver applies per contract, so missing it on one solicitation does not affect the next, but on the waived contract the lost recovery is permanent.