C.F.R. » Title 48 » CHAPTER 99—COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET › SUBCHAPTER B—PROCUREMENT PRACTICES AND COST ACCOUNTING STANDARDS › PART 9903—CONTRACT COVERAGE › Subpart 9903.3—CAS Rules and Regulations

48 C.F.R. § 9903.305

9903.305 Materiality.

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In determining whether amounts of cost are material or immaterial, the following criteria shall be considered where appropriate; no one criterion is necessarily determinative:

(a) The absolute dollar amount involved. The larger the dollar amount, the more likely that it will be material.

(b) The amount of contract cost compared with the amount under consideration. The larger the proportion of the amount under consideration to contract cost, the more likely it is to be material.

(c) The relationship between a cost item and a cost objective. Direct cost items, especially if the amounts are themselves part of a base for allocation of indirect costs, will normally have more impact than the same amount of indirect costs.

(d) The impact on Government funding. Changes in accounting treatment will have more impact if they influence the distribution of costs between Government and non-Government cost objectives than if all cost objectives have Government financial support.

(e) The cumulative impact of individually immaterial items. It is appropriate to consider whether such impacts:

(1) Tend to offset one another, or

(2) Tend to be in the same direction and hence to accumulate into a material amount.

(f) The cost of administrative processing of the price adjustment modification shall be considered. If the cost to process exceeds the amount to be recovered, it is less likely the amount will be material.

Notes of Decisions
Cited in 3 cases, 2011–2014 · leading case: Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir. 2014).
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Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed. Cir. 2014). “(b) The amount of contract cost compared with the amount under consideration. The larger the proportion of the amount under consideration to contract cost, the more likely it is to be material.”
Sikorsky Aircraft Corp. v. United States, 102 Fed. Cl. 38 (Fed. Cl. 2011). · cites it 2× “48 C.F.R. § 9903.305 . This definitional regulation applies to CAS 418.”
Sikorsky Aircraft Corp. v. United States 09-844c &, 110 Fed. Cl. 210 (Fed. Cl. 2013). · cites it 4× “, materiality, 48 C.F.R. § 9903.305 provides criteria that “shall be considered where appropriate” in “determining whether amounts of cost are material or immaterial.”
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