(iii) Step Three: Evaluate the Task of Estimating a Cancellation Ceiling.
As indicated in Figure 6.A (next page), a cancellation ceiling estimate is based on several separate estimates or "building blocks." You should develop each of the "building blocks" listed in Figure 6.A, and estimate the offsets listed to arrive at a cancellation ceiling. Each estimate is based on the point in time when cancellation could occur. Steps Four through Ten provide guidance on developing each of these estimates. As you complete each step, enter the result in Figure 6.A. Then do the arithmetic to compute the cancellation ceiling.
Cancellation Ceiling Estimate For a Cancellation Occurring at the End Of Year _____ of the Multi-year Contract | ||||
BUILDING BLOCKS | ESTIMATE | RESULTING FROM STEP | ||
Nonrecurring Costs incurred but not yet recovered | $ | Four | ||
Nonrecurring Costs the contractor is committed to incur | + | Five | ||
Recurring Costs incurred for the canceled end items | + | Six | ||
Recurring costs the contractor is committed to incur for the canceled end items | + | Seven | ||
The impact of the cancellation on the cost of the end items already purchased (i.e., those not canceled) | + ______________ | Eight | ||
SUBTOTAL >>>> | $ | |||
OFFSETS | ||||
Work in process on the canceled end items that can either be delivered to the Government or sold | less _______________ | Nine | ||
SUBTOTAL >>>> | $ | |||
Commitments the contractor has made that can be canceled in whole or in part | less ______________ | Ten | ||
TOTAL >>>> | $ | Eleven | ||
Figure 6.A | ||||