Far Home Office Overhead

Prime contractors working on federal government projects or any project for that matter have job site or field overhead general conditions. Despite the myriad causes of owner caused delay the. Owner caused delay is common on construction projects.

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Home office overhead costs are costs that are incurred to support the work but are not directly chargeable to a specific project.

Far home office overhead. 5183 60 2 bca 2688 1960 used to calculate home office overhead. Mona carlson ptac counselor and contracting specialist don t miss mona s may 13th workshop on overhead pricing. A the contracting officer shall incorporate the cost principles and procedures in subpart 31 3 by reference in. Please note that as indicated above in addition to the far overhead statement in performing a far audit in accordance with gagas the cpa firm is required to prepare a separate report on the a e firm s compliance with government regulations including far part 31 and related laws and internal controls related to payroll cash.

It may arise from owner directed changes to the work or constructive changes delays in furnishing owner provided equipment or materials suspensions of work differing site conditions slow responses to shop drawing submittals or requests for information or a number of other causes. The eichleay formula was established following a decision of the armed services board of contract appeals in eichleay corporation asbca no. This category includes all contracts and contract modifications for research and development training and other work performed by educational institutions defined as institutions of higher educations in the omb uniform guidance at 2 cfr part 200 subpart a and 20 u s c. On a practical note if the firm doesn t report a field rate then their overhead will not be fully absorbed thus the firm will be leaving money on the table on home office jobs.

Incurring extended field office overhead on a federal government project happens and in many instances is due to differing site conditions or another impact e g design issue change order work etc caused by the government. Again the best example of this may be the contractor s home office. Most of those working in the construction contract claims business are familiar with 1960 decision by the armed services board of contract appeals asbca in the eichleay corporation case which recognized a contractor s right to recover unabsorbed home office overhead for owner caused delays and work stoppages. Home office overhead costs are overhead costs incurred by the contractor that are not associated with a particular project but really are necessary to support the contractor s operations as a whole.

In 1989 the western division of naval facilities engineering command now navfac sw prepared a manual entitled overhead policy guidance for construction contracts which outlined options for distribution of overhead costs. Normally the eichleay formula is used when the project has been completed and costs are available and accountable. Unfortunately it has never been updated. Unabsorbed home office overhead is also a well known but not well understood delay damage and like extended field overhead is only caused by a critical project delay.

The other kind of overhead is home office overhead.