266 | Page Public Services and Procurement Canada September 30, 2019
Appendix A
Current Asset Valuation Guidance in Comparator Jurisdictions
The United Kingdom Single Source Regulations Office (SSRO) uses a principles based framework and allows
practitioners to exercise professional judgment in determining whether a particular cost basis is appropriate.
As a result, there is not clear direction provided on what cost basis should be used to determine the price of
the goods or services procured. The guidance specifically allows costs to be charged to the public sector
procurement authority if they are deemed to be appropriate, attributable, and reasonable by the reviewing
practitioner.
The costs should also be supported by adequate and sufficient evidence, assigned to contracts
only once, and are recorded and reflected in the books of account.
Re-evaluations of assets are permissible
but have to be agreed by the Secretary of State if they are to be Allowable.
The United States principles are more prescriptive, but do not specifically identify which cost basis is
appropriate. Under the Unites States Federal Acquisition Regulation, costs are allowable only when they are
reasonable, allocable, in accordance with standards promulgated by the Cost Accounting Standards Board
or generally accepted accounting principles, and the terms of the contract.
Article 31.202-2 (c) specifically
states that when “contractor accounting practices are inconsistent with this subpart 31.2, costs resulting from
such inconsistent practices in excess of the amount that would have resulted from using practices consistent
with this subpart are unallowable”.
Most specifically this would include replacement and opportunity costs
not being allowable consistent with the United Kingdom. Therefore, historical costs would be deemed to be
appropriate cost basis under the United States guidance as well.
Australia’s Department of Defence Capability Acquisition and Sustainment Group is very similar to the United
Kingdom in that it is principles based and allows for judgment to be exercised. It does not specifically identify
what cost basis should be used, but again suggests that the contractor’s accounting system for identifying
the contract cost should be “based on sound accounting principles, appropriate for the purpose of the
contract, and internal control practices, consistently applied”.
Therefore, similar to the guidance identified
above from the United Kingdom and United States, a contractor’s use of cost basis depends on what is
specifically authorized in Australian Government-Department of Defence-Capability Acquisition and
Sustainment Group, Capability Acquisition & Sustainment Group Cost Principles accounting standards. As
Single Source Regulations Office, Single source cost standards-Statutory guidance on Allowable Costs, July 2016,
http://www.metasums.co.uk/uploads/asset_file/Allowable%20Costs%20guidance%20for%20qualifying%20contracts%20awarded
%20after%201%20July%202016.pdf>, accessed August 14, 2017.
Ibid.
Ibid.
United States General Services Administration Federal Government, Federal Acquisition Regulations, August 17, 2007,
https://www.acquisition.gov/sites/default/files/current/far/pdf/FAR.pdf, accessed August 14, 2017.
Ibid.
Australian Government-Department of Defence-Capability Acquisition and Sustainment Group, Capability Acquisition &
Sustainment Group Cost Principles, September 2015,
http://www.defence.gov.au/casg/Multimedia/CASG_Cost_Principles_(Sep_2015)-9-4057.pdf>, accessed August 14, 2017.
CAGS Revised to v2.0 October 2017 http://www.defence.gov.au/casg/Multimedia/CASG_Cost_Principles-9-8642.pdf. Accessed
March 24, 2018