GovCon Glossary: Finance Terms

The internal funding a contractor sets aside to pursue new business, covering capture activities, proposal writing, orals prep, and related labor and travel, for a specific opportunity or across a fiscal year. B&P costs are typically booked to an indirect cost pool rather than billed to a contract, so many companies track them closely against win rate and profitability.

A DoD report, part of the Cost and Software Data Reporting (CSDR) system, in which contractors on major defense programs report actual costs broken out by work breakdown structure element, along with labor hours and recurring versus nonrecurring cost. The government uses CCDR data to build cost estimates for future programs and to check the realism of proposed pricing, and the reporting requirement is typically placed on contract as a CDRL.

A structured comparison of the total expected costs of a course of action against its expected benefits, expressed in comparable terms, used to decide whether an investment, program, or approach is worth pursuing. In federal acquisitions, a CBA commonly supports business case analyses, make-or-buy decisions, and justifications for alternatives to a stated requirement.

The forecasted cost required to finish the remaining work on a contract or task, measured from the current point forward and excluding costs already incurred. It's a core Earned Value Management metric used alongside Estimate at Completion (EAC = actual cost to date + ETC) to flag whether a program is trending over or under budget.

The federal government's budget year, which runs from October 1 through September 30 and is named for the calendar year it ends in, so FY2027 starts on October 1, 2026. The fiscal calendar drives contracting activity. The fourth quarter, July through September, brings a surge of awards as agencies obligate expiring funds. The start of a new fiscal year often begins under a continuing resolution that limits new starts.

The government's own estimate of what an effort should reasonably cost, developed by the program office before an acquisition to help size the budget, shape the acquisition strategy, and benchmark offerors' proposed costs during evaluation. It typically breaks out direct labor, materials, ODCs, indirect rates, and profit/fee, and is generally required for actions above the simplified acquisition threshold.

A cost a contractor incurs that supports more than one contract or the business overall, so it can't be charged directly to a single project. Examples include facilities, IT, HR, and executive salaries. Indirect costs are grouped into pools such as fringe, overhead, and G&A, then allocated to contracts using rates applied to a base like direct labor. A contractor's indirect rates have a large effect on its price, which is why agencies and DCAA look closely at how they're built.

A defined role on a contract (such as Program Manager, Systems Engineer, or Junior Analyst) tied to specific qualifications, responsibilities, and usually a negotiated labor rate or rate ceiling. LCATs are central to labor-hour and T&M contracts and IDIQ vehicles like GSA schedules, where each category's rate and minimum qualifications are spelled out in the contract.

The total cost of an asset or system across its entire existence (research and development, acquisition, operations and support, and disposal), not just the purchase price. Program offices use LCC estimates to compare alternatives and justify budgets, since sustainment and O&S costs typically dwarf the initial acquisition cost over a program's life.

A direct cost billable to a specific contract that isn't labor or materials: think travel, shipping, equipment rental, subcontractor costs, or special tooling. Unlike indirect/overhead costs, ODCs are charged straight to the contract that incurred them and are typically itemized separately in cost proposals and invoices.

DoD's annual process for turning strategy into funded programs. Planning sets priorities, programming allocates resources across the next five years through the POM, budgeting refines the first year into the President's budget request, and execution tracks how the money is spent. Because requirements usually need to be in the POM two or more years before a contract is awarded, capture teams that understand PPBE can engage program offices early, while the requirement is still being shaped.

The document each DoD component submits during the programming phase of PPBE, laying out its proposed funding for programs across the next five years. A program that isn't in the POM generally doesn't get funded, so the POM is an early signal of future contract opportunities. Capture teams track POM cycles to learn which requirements are gaining or losing funding long before a solicitation appears.

A quick, low-precision cost or effort estimate given early in an opportunity, before requirements are firm, to gauge whether a solution is roughly affordable or feasible. A ROM is meant to bound a wide range rather than serve as a reliable basis for pricing a formal proposal.