Metrics Glossary

An Adequate Accounting System (as determined by DCAA) can properly accumulate and report costs by contract. Required for cost-type contracts, T&M contracts, and forward pricing rate proposals.

An Allocable Cost can be assigned to one or more cost objectives (contracts) based on the relative benefits received. A cost is allocable if it is incurred specifically for the contract, benefits the contract, or is necessary for overall operations.

An Allowable Cost (FAR 31.201) must be: (1) reasonable in nature and amount, (2) allocable to the contract, (3) in accordance with GAAP and contract terms, and (4) not specifically prohibited. Unallowable costs include entertainment, alcohol, fines/penalties, and lobbying.

An appropriation is a law that authorizes federal agencies to obligate and spend funds. There are 12 regular appropriation bills covering all federal agencies. Without an appropriation, agencies cannot enter new contracts.

An authorization bill establishes or continues a federal program and recommends funding levels. The NDAA is a defense authorization. Authorization does NOT provide funding — that requires a separate appropriation bill.

An award ceiling is the maximum dollar amount available under a grant, contract, or task order. It is the hard upper limit on funding unless the government formally increases the ceiling.

The Base Year is the initial period of a multi-year contract, typically 12 months. Option years may extend the contract up to 5 years total. The government is only obligated for the base year.

Budget Authority is the authority provided by law to enter into financial obligations that will result in outlays. Types: appropriations, borrowing authority, contract authority, and spending authority from offsetting collections.

A budget period is the segment of the project period covered by one approved budget and one increment of funding. Many awards use annual budget periods inside a longer project period.

CAS (Cost Accounting Standards) are 19 standards governing how contractors measure, assign, and allocate costs to government contracts. Full CAS applies to contracts over $50M; modified CAS for contracts over $7.5M.

Color of Money refers to the specific appropriation type that funds a contract. Federal funds have three constraints: purpose (what it can buy), time (when it must be obligated), and amount (how much). Using the wrong color of money is an Antideficiency Act violation.

The Commercial Item Exception (FAR 15.403-1(c)(3)) exempts commercial items from certified cost or pricing data requirements. A major benefit — avoids defective pricing liability and reduces proposal preparation costs.

A Continuing Resolution (CR) is a temporary spending bill that funds the government at prior-year levels when Congress fails to pass regular appropriation bills by the start of the fiscal year (October 1). CRs restrict new contract starts and limit spending to prior-year rates.

A Cost Accounting System (CAS) tracks direct and indirect costs by contract. Required for cost-reimbursement contracts and must be approved by DCAA. Must distinguish between allowable and unallowable costs.

Cost Analysis (FAR 15.404-1(c)) is the review and evaluation of each cost element in a contractor's proposal to determine if costs are allowable, allocable, and reasonable. Required when certified cost or pricing data is submitted. Includes evaluation of direct labor, materials, overhead, G&A, and profit.

Cost Realism analysis (FAR 15.404-1(d)) is an evaluation of a cost proposal to determine whether the proposed costs are realistic for the work to be performed. Required for cost-reimbursement contracts. The government assesses whether costs are understated (buying in) or overstated. Unlike cost reasonableness, cost realism looks at whether costs reflect what performance WILL cost, not whether the price is fair.

Cost Realism Analysis (FAR 15.404-1(d)) evaluates whether proposed costs are realistic for the work to be performed. Required for cost-reimbursement contracts. The government assesses whether costs are understated (buying in) or overstated. Adjustments are made to the evaluated cost, not the proposed cost — so underpricing does NOT give you a competitive advantage. Unlike cost reasonableness, cost realism looks at whether costs reflect what performance WILL cost.

Cost Reasonableness (FAR 31.201-3) means a cost does not exceed what a prudent business person would incur in a competitive environment. Each cost element must be reasonable in nature and amount. Unreasonable costs are unallowable even if otherwise permitted.

Country of Origin in government procurement determines compliance with the Buy American Act and Trade Agreements Act. For manufactured products, the country of origin is where the item was substantially transformed into a new article of commerce. Critical for GSA Schedule products (must be TAA-compliant) and DoD purchases (Berry Amendment items must be domestic).

De-obligation is the cancellation of a previously recorded obligation, typically when a contract is completed under budget or terminated. De-obligated funds may be available for other uses depending on the appropriation.

A demand signal in defense logistics is a forecast of future requirements for supplies and services. Used by DLA and military services to plan procurement and inventory levels.

A Disclosure Statement (CASB DS-1) describes a contractor's cost accounting practices. Required for full CAS coverage. Filed with the cognizant federal agency.

The method by which the government pays contractors. EFT banking information is required in SAM.gov registration.

The Evaluated Price is the government's assessment of what a proposal will actually cost, after applying evaluation adjustments. May differ from the proposed price (e.g., cost realism adjustments, option pricing).

EVM (Earned Value Management) is a project management technique integrating scope, schedule, and cost data. Required on large DoD contracts per DFARS 234.201.

Federal share is the portion of a project cost paid by federal funds. It is the government-funded part of the total project budget.

Fee (or profit) on government contracts is the contractor's compensation beyond cost recovery. Determined through weighted guidelines (FAR 15.404-4) considering risk, investment, performance, and socioeconomic factors. Typical ranges: 5-10% for low-risk services, 8-15% for R&D, 10-20% for high-risk manufacturing. Fee is not allowed on cost-reimbursement contracts without explicit authorization.

The federal Fiscal Year (FY) runs from October 1 to September 30. FY2026 begins October 1, 2025. End-of-fiscal-year (September) is peak contracting time as agencies spend remaining funds.

FPRA (Forward Pricing Rate Agreement) is a negotiated agreement between a contractor and the government establishing billing rates for future proposals and contracts. Reduces proposal preparation and negotiation time.

FPRP (Forward Pricing Rate Proposal) is the contractor's submission to the government proposing indirect rates and direct labor rates for future contract proposals. Supported by detailed cost data including budgets, headcount projections, and trend analyses. Reviewed by DCAA and negotiated by the ACO to establish an FPRA.

Fringe Benefits are employee compensation beyond base salary: health insurance, retirement, PTO, life insurance, disability. Typically 25-40% of salary. An allowable indirect cost on government contracts.

The Fringe Rate is the indirect cost rate covering employee benefits as a percentage of direct labor: health insurance, retirement contributions, PTO, payroll taxes, life/disability insurance, and workers' compensation. Typically ranges from 25-42% of base salary depending on benefit richness. Applied to direct labor dollars before overhead.

Full Funding provides the entire cost of a contract at award. Required for most fixed-price contracts. DoD policy generally requires full funding for procurement appropriations.

FY (Fiscal Year) — the federal fiscal year runs October 1 through September 30. FY2026 = Oct 1 2025 - Sep 30 2026.

G&A (General and Administrative) Rate is the indirect cost pool for company-wide management expenses: executive salaries, HR, accounting, legal, corporate insurance, and business development. Applied as a percentage of total cost input (all direct costs plus overhead). Typically 10-25%. The last indirect pool applied before fee/profit.

G&A (General and Administrative) is an indirect cost pool for company-wide expenses: executive management, accounting, HR, legal, marketing. Applied to total cost input. Typically the last pool applied before fee.

A government shutdown occurs when Congress fails to pass appropriation bills or a CR. During a shutdown, non-essential government operations cease, most contracting actions stop, and only excepted activities (public safety, national security) continue.

HUBZone firms receive a 10% price evaluation preference in full and open competition (FAR 19.1307). If the HUBZone offer is not the lowest price but is within 10% of the lowest, it is treated as the lowest for evaluation purposes. This preference does not apply in set-aside competitions or when price is evaluated under best value tradeoff.

IFF (Industrial Funding Fee) is the fee GSA Schedule contractors pay quarterly — currently 0.75% of reported sales. Funds GSA operations. Reported through the 72A system.

Incremental Funding provides funds for only a portion of a contract's total cost, with additional funds provided as they become available. Common for R&D contracts spanning multiple fiscal years. Requires a "Limitation of Funds" clause.

An Incurred Cost Submission (ICS) is the annual cost report that cost-type contractors must submit to DCAA within 6 months after fiscal year end. Details direct and indirect costs for each contract.

An Indirect Cost Rate is the percentage applied to direct costs to cover overhead, G&A, and other indirect costs. Negotiated with the cognizant federal agency. Required for cost-reimbursement grants and contracts.

Indirect Rates (fringe, overhead, G&A) are percentages applied to direct costs to recover indirect expenses. Negotiated with the cognizant agency. Provisional rates used for billing; final rates determined after audit.

Indirect Rates (fringe, overhead, G&A) are percentages applied to direct costs to recover indirect expenses. Negotiated with the cognizant agency. Provisional rates used for billing; final rates determined after audit. Common structure: fringe (30-40% of labor), overhead (40-80% of direct labor+fringe), G&A (10-20% of total cost input).

A Labor Category (LCAT) defines a specific role with minimum qualifications, experience level, and education requirements. Used in cost proposals to price labor. Must match contract requirements.

LOA (Letter of Offer and Acceptance) is the formal document in the Foreign Military Sales (FMS) process through which the U.S. government offers defense articles or services to a foreign government. The LOA specifies items, estimated costs, delivery schedule, and terms. Once signed by the foreign government and returned with initial payment, it becomes a binding agreement.

A Loaded Rate (or fully burdened rate) is the total hourly billing rate that includes base salary plus all indirect cost pools (fringe, overhead, G&A) and profit/fee. This is the rate the government actually pays. Example: $45/hr salary with 2.2x multiplier = $99/hr loaded rate.

MILCON (Military Construction) is a five-year appropriation for constructing, altering, or improving military facilities. Governed by 10 U.S.C. 2801-2861. Projects over $2M threshold typically require congressional notification.

NICRA (Negotiated Indirect Cost Rate Agreement) is the agreement between an organization and its cognizant federal agency establishing indirect cost rates. Used for grants and cost-type contracts.

Non-federal share is the portion of a project cost paid from non-federal sources, including the recipient's own funds, state funds, or private matches.

NTE ("Not-to-Exceed") is a ceiling amount on a federal contract that funds or labor cannot exceed without a formal contract modification. The NTE amount is the hard dollar cap — the contractor stops work at the ceiling unless the Contracting Officer issues a bilateral modification raising it. Most common in Time-and-Materials (T&M) and cost-reimbursement contracts (FAR Part 16) where actual costs are not known upfront, but NTE clauses also appear in construction contracts (where they cap labor hours or material quantities for a defined scope) and IDIQ/BPA task orders (where they cap each individual order against the master vehicle ceiling). When you see "NTE $2,500,000" in a solicitation, that is the maximum the contract can pay across its full period of performance, base plus all options.

O&M (Operations and Maintenance) is a one-year appropriation used for day-to-day operations, maintenance, training, and most services contracts. The most common appropriation type for services contracting.

A legally binding commitment of government funds to pay for goods or services. In USAspending, obligations represent money committed to specific contracts.

ODC (Other Direct Costs) are non-labor direct costs such as travel, materials, equipment, and subcontracts. Billed at actual cost, often with a ceiling.

Offsets are industrial compensation required by foreign governments when purchasing U.S. defense articles. Can include technology transfer, co-production, in-country investment. Not applicable to USG direct purchases.

An Omnibus Appropriations bill packages multiple (or all) regular appropriation bills into a single piece of legislation. Often passed as a catch-all when individual bills stall.

An Option Year is an additional performance period the government may exercise at its discretion. Typically 1-4 option years after the base year. Exercise is not guaranteed — the government can choose not to exercise options.

An outlay is an actual payment (expenditure) by the government. Outlays occur when the Treasury disburses funds, typically when a contractor submits an approved invoice. Outlays lag obligations.

Overhead (OH) is an indirect cost pool for expenses supporting direct work: rent, utilities, equipment, non-billable management. Expressed as a rate applied to direct labor dollars.

The Overhead Rate is the indirect cost rate for expenses that support direct project work but cannot be tied to a specific contract: facilities rent, utilities, non-billable technical management, equipment depreciation, and IT infrastructure. Applied to direct labor (or labor + fringe) as a percentage, typically 40-80%.

PoP (Period of Performance) is the timeframe during which contract work must be performed. Typically includes a base period and option periods.

Prevailing wage is the hourly wage, benefits, and overtime determined by DOL for a specific area and trade. Required by Davis-Bacon Act (construction) and Service Contract Act (services). Published as Wage Determinations.

Price Analysis (FAR 15.404-1(b)) is the process of examining a proposed price without evaluating its separate cost elements. Techniques include comparing competitive proposals, published price lists, historical prices, and independent estimates. Used for commercial items and when cost data is not required.

Price realism is the evaluation of whether a proposed price is too low to be believable for the required work. It is common in negotiated procurements and helps the government judge performance risk.

Price Reasonableness (FAR 15.404-1(b)) determines whether a proposed price is fair and reasonable. Established through adequate price competition, comparison to historical prices, market research, or independent government cost estimates. Does NOT require cost data — focuses on the total price, not individual cost elements.

Procurement is a three-year appropriation used for purchasing major items like weapons systems, vehicles, and equipment. Distinct from O&M (services) and MILCON (construction).

Profit Analysis (FAR 15.404-4) is the structured approach to determining fair and reasonable profit or fee. Considers contractor risk, capital investment, performance, and socioeconomic programs. Weighted guidelines method (DD Form 1547) used by DoD. Typical profit ranges: 5-15% for services, 8-15% for R&D, 10-20% for high-risk work.

The project period is the total time during which a federal grant project may be performed and charged. It can include multiple budget periods, but work outside the project period usually cannot be paid with award funds.

A Provisional Billing Rate is a temporary indirect cost rate used for interim billing on cost-type contracts until final rates are established through audit. Set by the ACO based on recent actual rates or the contractor's FPRP. Adjusted retroactively once final rates are negotiated after the annual incurred cost submission.

A Qualifying Country (DFARS 225.003) is a nation with a reciprocal defense procurement agreement with the U.S. Products from qualifying countries are treated the same as domestic products for DoD purchases, exempt from Buy American restrictions. Includes most NATO allies, Australia, Japan, Israel, and others. Listed in DFARS 225.872-1.

Rate Escalation is the planned annual increase in labor rates over a multi-year contract, typically reflecting inflation, merit increases, and market adjustments. Common escalation factors range from 2-4% annually. Must be justified in cost proposals and is subject to cost reasonableness review.

RDT&E (Research, Development, Test & Evaluation) is a two-year appropriation for research and development activities. Used for developing new systems and capabilities before production.

A Reasonable Cost (FAR 31.201-3) does not exceed what a prudent businessperson would incur in a competitive environment. Considered in terms of nature and amount.

Retainage is a portion of payment withheld until work is complete or a milestone is accepted. It is most common in construction and other progress-based contracts where the government wants payment leverage until final completion.

Sequestration is automatic, across-the-board spending cuts triggered when spending exceeds caps set by the Budget Control Act of 2011. Reduces both defense and non-defense discretionary spending equally.

Should-Cost analysis is a specialized form of cost analysis where the government develops its own estimate of what a contract SHOULD cost. Goes beyond cost realism to identify inefficiencies in the contractor's operations. Used on major acquisitions to negotiate better prices and improve contractor efficiency.

Specialty Metals (10 U.S.C. 2533b) is a DoD restriction requiring that certain high-performance metals (steel, titanium, zirconium alloys, nickel superalloys) used in defense articles be melted or produced in the U.S. or qualifying countries. Stricter than Buy American for these specific materials. Waivers available for non-availability or national security interest.

Uncompensated overtime is hours worked beyond 40 per week for which salaried (exempt) employees do not receive additional compensation. Can lower effective hourly rates in proposals. FAR 37.115 addresses this.

An Unfunded Requirements List (URL) is a military service submission to Congress identifying priority needs not funded in the President's Budget. Often used to justify additional appropriations.

A Wage Determination (WD) is a DOL document listing prevailing wages and fringe benefits for specific occupations in a geographic area. Davis-Bacon WDs cover construction; SCA WDs cover services.

DoD web-based system for electronic invoicing and receipt of goods/services.

WBS (Work Breakdown Structure) is a hierarchical decomposition of project work into manageable tasks. Required for major defense acquisitions and EVM.

WOSB and EDWOSB sole-source contracts can be awarded without competition up to $4.5M for services and $4.5M for manufacturing (adjusted periodically for inflation). The contracting officer must determine that the award can be made at a fair and reasonable price and that no responsible WOSB/EDWOSB can be identified through competitive procedures.

A Wrap Rate (or fully burdened rate) is the total billing rate for a labor category, including base salary, fringe benefits, overhead, G&A, and profit/fee. Example: $50/hr base × 2.0 wrap = $100/hr billed rate.