GC 540 — Advanced Finance: FAR Cost Principles, DCAA, CAS, TINA (14-week syllabus)
The undergraduate tier teaches price-to-win as a position. This course teaches the machinery underneath the price: how a cost is built, how the government's cost principles judge it, how the auditors check it, how the standards discipline it, and how the truth-in-negotiation rules make the builder accountable for it. This is the finance course the discipline has always needed and rarely had.
Course number: GC 540 · Credits: 3 · Format: 14 weeks, one 75-minute session per week (plus reading and a weekly finance artifact). Audience: Graduate students in the MS in Capture Management & Government Business Development; pricing analysts, capture managers, and finance professionals. Prerequisites: GC 501 (microeconomics) — the cost-floor and risk economics; recommended GC 510 (competitive strategy) taken with or before this course (pricing posture). Texts: the doctrine and literacy folders of this repository; the course reader of FAR excerpts (cost principles, profit, negotiation) and the standards — all rendered at concept altitude. A spreadsheet is sufficient for all computation. The course is stack-agnostic by design (doctrine/08).
A note on the canon. The pricing discipline in this course is the human rendering of a machine doctrine that encodes the same concepts as versioned rules and formulas. This course teaches the concepts — the cost floor, the burden chain, the three pricing anchors, the escalation discipline — never the software that encodes them. If a government inspector, an auditor, or a new tool ever replaced every system this industry uses, nothing in this course would change.
Learning outcomes
By the end of this course, a student can:
- Decompose a government contract's money into cost, fee, and price — and explain which of the three is contested in a given negotiation.
- Distinguish direct from indirect costs and trace a dollar from a labor hour to a fully-burdened billing rate through the burden chain (fringe → overhead → G&A → fee).
- Apply the FAR Part 31 cost principles: a cost is allowable if it is reasonable, allocable, and compliant with the applicable principles — and defend each judgment.
- Explain the role of the Cost Accounting Standards (CAS): what they standardize, when they apply, and what a disclosure statement does.
- Explain the Defense Contract Audit Agency's role across the contract life — pre-award, forward pricing, incurred cost — and prepare for an audit with discipline.
- Apply the Truth in Negotiations Act (TINA): when certified cost or pricing data is required, what the certificate demands, and the consequence of a defective pricing disclosure.
- Build a cost volume at the CLIN/sub-CLIN level: labor, ODCs, travel, subcontracts — each with a justification that survives scrutiny.
- Write a basis of estimate (BOE) for every material cost element: the source, the method, the evidence.
- Set a price-to-win position from the three anchors — competitor band, customer affordability ceiling, cost-plus floor — and enforce a contract-type margin floor with escalation discipline.
- Reconcile the cost volume with the technical volume: the cost-technical reconciliation as the auditable record.
- Govern the financial life of a pursuit: B&P budgets, margin discipline, escalation to the pricing authority, and the record-keeping that outlasts the contract.
Weekly schedule
| Week | Theme | In-session (75 min) | Reading / material | Assignment due next week |
|---|---|---|---|---|
| 1 | The anatomy of contract money | Cost, fee, price. What the government pays for, what the firm earns, and where the contested numbers live. Why "the price" is the last number built, not the first. | doctrine/05; the pricing canon at concept altitude | One-page anatomy: decompose a real (published, closed) award into cost, fee, and price as best the public record shows. |
| 2 | Direct vs. indirect cost | The direct cost of a contract (labor, ODCs, travel, subs) and the indirect costs that must be recovered (fringe, overhead, G&A). Why the classification matters and who decides it. | the course reader on cost accounting | Classification exercise: take a list of twenty expense items and classify each direct or indirect, with reasoning. |
| 3 | The burden chain | Building the fully-burdened rate: fringe on direct labor, overhead on direct + fringe, G&A on the accumulated base, fee at the end. The burden multiplier and what it hides. | the burden-chain canon at concept altitude (the LOE rate composer concept) | Worked problem: build a fully-burdened billing rate from a direct rate and four burden percentages; show each layer. |
| 4 | FAR Part 31 cost principles | Allowability, allocability, reasonableness. The three tests and the judgment each requires. Unallowable costs and the traps they set. | the course reader on FAR Part 31; doctrine/04 | Case memo: three costs from a real (sanitized) situation — state allowability, allocability, reasonableness for each. |
| 5 | Cost Accounting Standards | What CAS standardizes: consistency, accounting for costs, allocation bases. When CAS applies, what a disclosure statement commits to, and the cost of noncompliance. | the course reader on CAS | Comparison memo: how CAS discipline differs from good-enough bookkeeping, and where it binds a firm's pricing flexibility. |
| 6 | DCAA and the audit life | The audit agency's role: pre-award reviews, forward pricing, incurred-cost audits. What an auditor looks for and how a firm prepares. | the course reader on DCAA | Preparation memo: build a DCAA-readiness checklist for a firm that prices cost-type work, from provisional rates to the audit. |
| 7 | TINA: the truth-in-negotiation rule | Certified cost or pricing data: when it is required, what the certificate attests, and the defective-pricing consequence. The difference between cost data and cost judgment. | the course reader on TINA | Scenario memo: in a fact pattern, identify whether TINA applies, what must be disclosed, and what a defective disclosure would cost. |
| 8 | Contract type as financial risk | FFP, T&M, FFP-LoE, CPFF, CPAF, CPIF: who bears cost risk, how fee is earned, and what each does to the margin floor. | doctrine/05; the contract-type and margin-floor canon at concept altitude | Matrix: for each contract type, the risk to the firm, the fee mechanism, and the floor that protects the firm. |
| 9 | Midterm | In-class: given a case cost structure, classify, build the burden chain, apply the principles, and state the TINA posture. | (review weeks 1–8) | Midterm submission. |
| 10 | Building the cost volume | The CLIN/sub-CLIN structure: labor, ODCs, travel, subcontracts. Each line extended, justified, and reconciled to the technical approach. | the cost-volume canon at concept altitude | Build a cost volume for a case pursuit: CLINs, labor lines, ODCs, travel, subs — every line with a justification. |
| 11 | The basis of estimate | A BOE for every material cost element: the rate basis, the hours basis, the escalation basis, the vendor quote. What makes a BOE credible to an auditor. | the BOE canon at concept altitude | Write full BOEs for the three largest cost elements in your cost volume. |
| 12 | Price-to-win, with the floor | The three anchors — competitor band, customer affordability ceiling, cost-plus floor. Strategy selection, margin at target, and the escalation ladder when the floor is threatened. | doctrine/05; the price-to-win and floor discipline canon at concept altitude | Pricing memo: set the price-to-win for your case pursuit; show the anchors, the margin at target, and the escalation if the floor fails. |
| 13 | Cost-technical reconciliation | The price must be the technical proposal in money. The reconciliation memo as the auditable record linking cost and technical volumes. | the reconciliation canon at concept altitude | Reconciliation memo: prove that your cost volume prices what your (case) technical volume promises. |
| 14 | The financial life of a pursuit | B&P budgets, cash flow, margin discipline, and the record that outlasts the contract. Synthesis and panel defense of the pricing volume. | (course synthesis) | Final pricing volume for a case pursuit, defended before a panel that includes a pricing practitioner. |
Assessment summary
- Weekly finance artifacts — 40%. A cumulative pricing journal: classification, burden chain, principles, CAS/DCAA/TINA postures, cost volume, BOEs.
- Midterm — 20%. In-class cost-structure and compliance examination.
- Final pricing volume + defense — 30%. A complete, defensible pricing volume for a case pursuit, defended before a panel that probes the numbers.
- Participation and peer review — 10%.
The graduate rubric
| Criterion | Excellent | Proficient | Developing |
|---|---|---|---|
| Cost accuracy | Numbers are correct, extended, and reconciled | Minor arithmetic or extension errors | Major errors or invented figures |
| Principle application | Allowability/allocability/reasonableness argued correctly | Mostly correct | Principles ignored or misapplied |
| Evidence discipline | Every cost element carries a defensible basis | Most elements justified | BOE asserted, not evidenced |
| Floor discipline | Margin floor enforced with escalation discipline | Floor recognized, escalation weak | Floor ignored or undercut |
| Integrity | TINA/audit posture is clean and documented | Sound but informal | Unsafe or undocumented |
Policies
- The numbers are the subject. Fabricated rates, invented quotes, or a BOE without a basis fails the relevant assessment. This course grades the discipline of honest money.
- Real contracts, safe exercises. All teaching objects are real, published-and-closed contracts and public records. No live competition, no non-public pricing data.
- Late work. An honest early warning beats a silent late submission.
The government does not buy a price; it buys a defensible cost structure that happens to end in a number. This course teaches you to build the structure.