How is the Treasury Rate applied in calculating Facilities Capital Cost of Money (FCCOM)?

The Treasury Rate is used as a benchmark in calculating the Facilities Capital Cost of Money (FCCOM) by serving as a risk-free rate of return on capital investments. FCCOM reflects the cost of capital associated with facilities and equipment that are not directly billable to contracts. By applying the Treasury Rate, agencies and contractors can determine an appropriate rate to apply to their capital investments, ensuring they account for the opportunity cost of using funds for facility-related expenses rather than investing them elsewhere. This helps in budgeting and financial planning within government contracts and projects.