48 CFR Part 5231 — Contract Cost Principles and Procedures

PART 5231—CONTRACT COST PRINCIPLES AND PROCEDURES Authority: 5 U.S.C. 301, 10 U.S.C. 2501, 10 U.S.C. 7315, DoD Directive 5000.35. Source: 62 FR 66827, Dec. 22, 1997, unless otherwise noted. Subpart 5231.2—Contracts With Commercial Organizations 5231.205 Selected costs. 5231.205-90 Shipbuilding capability preservation agreements. (a) Scope and authority. (b) Definition. Incremental indirect cost, (c) Purpose and guidelines. (1) The Assistant Secretary of the Navy for Research, Development and Acquisition must make a determination that an agreement would facilitate the achievement of the policy objectives set forth in 10 U.S.C. 2501(b). The primary consideration in making this determination is whether an agreement would promote future growth in the amount of private sector work that a shipbuilder is able to obtain. (2) An agreement generally will be considered only for a shipbuilder with little or no private sector work. (3) The agreement shall apply to prospective private sector work only, and shall not extend beyond 5 years. (4) The agreement must project an overall benefit to the Navy, including net savings. This would be achieved by demonstrating that private sector work will absorb costs that otherwise would be absorbed by the Navy. (d) Cost-reimbursement rules. (1) The agreement shall require the contractor to allocate the following costs to private sector work: (i) The direct costs attributable to the private sector work; (ii) The incremental indirect costs attributable to the private sector work; and (iii) The non-incremental indirect costs to the extent that the revenue attributable to the private sector work exceeds the sum of the costs specified in paragraphs (d)(1)(i) and (d)(1)(ii) of this subsection. (2) The agreement shall require that the sum of the costs specified in paragraphs (d)(1)(ii) and (d)(1)(iii) of this subsection not exceed the amount of indirect costs that would have been allocated to the private sector work in accordance with the contractor's established accounting practices. (3) The Navy may agree to modify the amount calculated in accordance with paragraph (d)(1) of this subsection if it determines that a modification is appropriate to the particular situation. In so doing, the Navy may agree to the allocation of a smaller or larger portion of the amount calculated in accordance with paragraph (d)(1) of this subsection, to private sector work. (i) Any smaller amount shall not be less than the sum of the costs specified in paragraphs (d)(1)(i) and (d)(1)(ii) of this subsection. (ii) Any larger amount shall not exceed the sum of the costs specified in paragraph (d)(1)(i) of this subsection and the amount of indirect costs that would have been allocated to the private sector work in accordance with the contractor's established accounting practices. (iii) In determining whether such a modification is appropriate, the Navy will consider factors such as the impact of pre-existing firm-fixed-price Navy contracts on the amount of costs that would be reimbursed by the Navy, the impact of pre-existing private sector work on the cost benefit that would be received by the contractor, and the extent to which allocating a smaller or larger portion of costs to private sector work would provide a sufficient incentive for the contractor to obtain additional private sector work. (e) Procedure.

Related documents

• 48 CFR Part 931 — Contract Cost Principles and Procedures#511199
• 48 CFR Part 31 — Contract Cost Principles and Procedures#510888
• 48 CFR Part 1231 — Contract Cost Principles and Procedures#511248
• 48 CFR Part 331 — Contract Cost Principles and Procedures#510984
• 48 CFR Part 3431 — Contract Cost Principles and Procedures#511668