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Cost & Financial Analysis

Plain-language definitions of every Cost & Financial Analysis term that shows up in government contracting work.

Cost & Financial AnalysisBOM

Bill of Materials (BOM)

A Bill of Materials is a structured list of all components, parts, materials, and quantities required to manufacture, assemble, or deliver a product or system under a government contract.

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Cost & Financial Analysis

Cost Sharing Agreement

A Cost Sharing Agreement in government contracting defines how a contractor and the government will share the costs of a research, development, or acquisition program.

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Cost & Financial AnalysisCBA

Cost-Benefit Analysis (CBA)

A Cost-Benefit Analysis is a structured method for comparing the costs and benefits of alternative courses of action to support government acquisition decisions and budget justifications.

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Cost & Financial AnalysisEDI

Electronic Data Interchange (EDI)

EDI in government contracting is the standardized electronic exchange of business documents, invoices, purchase orders, shipping notices, between contractors and government systems.

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Cost & Financial AnalysisFOB

FOB Destination

FOB Destination is a delivery term in government contracts meaning the seller bears transportation costs and risk of loss until goods are delivered to the government's specified delivery point.

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Cost & Financial Analysis

Indirect Cost

Indirect costs are government contract costs that cannot be directly attributed to a single contract and are allocated across multiple contracts through overhead and G&A rate structures.

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Cost & Financial AnalysisILC

Irrevocable Letter of Credit (ILC)

An Irrevocable Letter of Credit is a bank guarantee used in government contracting as an alternative to performance bonds, assuring the government of payment if the contractor defaults.

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Cost & Financial AnalysisLCC

Life Cycle Cost (LCC)

Life Cycle Cost is the total cost of a system or product over its entire life including acquisition, operations, support, and disposal, used to evaluate true long-term value in government procurement.

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Cost & Financial AnalysisLCCE

Life Cycle Cost Estimate (LCCE)

A Life Cycle Cost Estimate is the formal documented analysis of all costs incurred during a system's total life from concept to disposal, used for DoD acquisition decision-making and budget justification.

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Cost & Financial AnalysisMOU

Memorandum of Understanding (MOU)

An MOU is a formal agreement between two or more parties that documents mutual commitments and expectations, often used between government agencies or between the government and contractors.

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Cost & Financial AnalysisODC

Other Direct Cost (ODC)

Other Direct Costs are government contract costs that are directly attributable to a specific contract but are not labor, such as travel, materials, subcontractor costs, and equipment.

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