15.305 15.306-2 15.306-4 15.307-2 Institutions Indirect costs. [Amended] Applicable costs. [Amended] Apportionment. [Revised] Overhead determinations acceptable under special circumstances. [Revised] Cost applicable [Revised] to instruction. 15.504 15.505. Allocation of indirect manufacturing and plant operational costs. General and administrative costs (including home office allocation). Contractor's commercial products. Subpart F-Guidelines for Application in the Negotiation and Administration of FixedPrice Type Contracts and in the Negotiation of Termination Settlements 15.600 Scope of subpart. [Revised] Subpart A Applicability § 15.102 Cost-reimbursement supply and research contracts with concerns other than educational institutions. (a) For determination of reimbursable costs under such contracts, including cost-reimbursement type subcontracts thereunder, and the costreimbursement portion of time-andmaterials contracts (§ 3.406-1) of this chapter) except in such contracts where material is priced on a basis other than at cost in accordance with § 3.406-1(d) of this chapter; [Paragraph (a) amended, 26 F.R. 9641, Oct. 12, 1961] § 15.104 Construction contracts. (a) Subpart D of this part contains principles and procedures for the evaluation and determination of costs in connection with contracts and subcontracts for construction. This category includes all contracts for the construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property. It also includes contracts for architectengineer services related to such construction. It does not include contracts for vessels, aircraft, or other kinds of personal property. (b) The applicability of Subpart D of this part to fixed-price type contracts and subcontracts is set forth in Subpart F of this part. (c) Subpart D of this part applies to all cost-reimbursement type contracts (§ 3.405 of this chapter) for construction, as described in paragraph (a) of this section. The cost principles and procedures set forth in Subpart D of this part shall be incorporated by reference in cost-reimbursement construction contracts as the basis: (1) For determination of reimburseable costs under cost-reimbursement type contracts, including cost-reimbursement type subcontracts thereunder; (2) For the negotiation of overhead rates (Subpart G, Part 3 of this chapter); and (3) For the determination of costs of terminated cost-reimbursement type contracts where the contractor elects to "voucher out" his costs (Subpart D, Part 8 of this chapter), and for settlement of such contracts by determination (§ 8.209-7 of this chapter). [26 F.R. 9641, Oct. 12, 1961] § 15.105 ties. Contracts for industrial facili This category includes all cost-reimbursement type contracts (§ 3.405 of this chapter) for the acquisition, construction, fabrication, installation, rehabilitation or removal of industrial facilities as defined in § 13.101-6 of this chapter (whether the Government already owns the facilities or acquires title under the contract), where the facilities are furnished to or acquired by the contractor for use in performance of a Government contract or contracts. This category also includes those portions of fixedprice type contracts which provide for the furnishing by the contractor of facilities at cost. The cost principles and procedures set forth in Subpart E of this part shall be incorporated by reference in cost-reimbursement type facilities contracts, and in fixed-price type contracts which provide for the furnishing by the contractor of facilities at cost as the basis: reim (a) For determination of reimbursable costs under cost-reimbursement type contracts, including cost-reimbursement type subcontracts thereunder; (b) For determination of bursable costs under facilities-at-cost provisions of fixed-price type contracts; (c) For the negotiation of overhead rates (Subpart G, Part 3 of this chapter); and (d) For the determination of costs of terminated cost-reimbursement type contracts or the terminated facilities-atcost portion of fixed-price type contracts, where the contractor elects to "voucher out" his cost (Subpart D, Part 8 of this chapter), and for settlement of such contracts by determination (§ 8.209-7 of this chapter). [26 F.R. 9641, Oct. 12, 1961] Subpart B-Principles and Procedures for Use in Cost-Reimbursement Type Supply and Research Contracts With Commercial Organizations § 15.205-1 Advertising costs. (a) Advertising costs mean the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, trade papers, outdoor advertising, dealer cards and window displays, conventions, exhibits, free goods and samples, and the like. (b) The only advertising costs allowable are those which are solely for (1) the recruitment of personnel required for the performance by the contractor of obligations arising under the contract when considered in conjunction with all other recruitment costs, as set forth in § 15.205-33, (2) the procurement of scarce items for the performance of the contract, or (3) the disposal of scrap or surplus materials acquired in the performance of the contract. Costs of this nature, if incurred for more than one defense contract or for both defense work and other work of the contractor, are allowable to the extent that the principles in §§ 15.201-3, 15.201-4, and 15.203 are observed. [27 F.R. 1715, Feb. 22, 1962] § 15.205-6 Compensation for personal services. (a) General. * * * (4) Notwithstanding any other provisions of this section costs of compensation are not allowable to the extent that they result from provisions of labor-management agreements that, as applied to work in the performance of Government contracts, are determined to be unreasonable either because they are unwarranted by the character and circumstances of the work or because they are discriminatory against the Government. The application of the provisions of a labor-management agreement designed to apply to a given set of circumstances and conditions of employment (for example, work involving extremely hazardous activities or work not requiring recurrent use of overtime) is unwarranted when applied to a Government contract involving significantly different circumstances and conditions of employment (for example, work involving less hazardous activities or work continually requiring use of overtime). It is discriminatory against the Government if it results in individual personnel compensation (in whatever form or name) in excess of that being paid for similar non-Government work under comparable circumstances. Disallowance of costs will not be made under this subparagraph unless: (i) The contractor has been permitted an opportunity to justify the costs, and (ii) Due consideration has been given to whether unusual conditions pertain to the Government contract work, imposing burdens, hardships, or hazards on the contractor's employees, for which compensation that might otherwise appear unreasonable is required to attract and hold necessary personnel. [Subparagraph (4) amended, 27 F.R. 3454, Apr. 11, 1962] § 15.205-25 Overtime, extra-pay shift and multishift premiums. Premiums for overtime, extra-pay shifts, and multishift work are allowable to the extent approved pursuant to § 12.102-4, or permitted pursuant to § 12.102-5 of this subchapter. [27 F.R. 3454, Apr. 11, 1962] § 15.205-33 Recruitment costs. (a) Subject to paragraphs (b) and (c) of this section, and provided that the size of the staff recruited and maintained is in keeping with workload requirements, costs of help-wanted advertising, operating costs of an employment office necessary to secure and maintain an adequate labor force, costs of operating an aptitude and educational testing program, travel costs of employees while engaged in recruiting personnel, and travel costs of applicants for interviews for prospective employment, are allowable to the extent that such costs are incurred pursuant to a well managed recruitment program. Where the contractor uses employment agencies, costs not in excess of standard commercial rates for such services are allowable. (b) In publications, costs of helpwanted advertising that (1) includes color, (2) includes advertising material for other than recruitment purposes, or (3) is excessive in size (taking into consideration recruitment purposes for which intended and normal business practices in this respect) are unallowable. (c) Cost of (1) help-wanted advertising and (2) excessive salaries, fringe benefits and special emoluments that have been offered to prospective employees, designed to "pirate" personnel from another defense contractor, or in excess of the standard practices in the industry, are unallowable. [27 F.R. 1715, Feb. 22, 1962] § 15.205-41 Taxes. (a) (5) taxes on any category of property which is used solely in connection with work other than on Government contract. (Taxes on property used solely in connection with either non-Government or Government work should be considered directly applicable to the respective category of work unless the amounts involved are insignificant or comparable results would otherwise be obtained; e.g., taxes on contractor-owned work-in-process which is used solely in connection with non-Government work should be allocated to such work and taxes on contractor-owned work-inprocess inventory, and Governmentowned work-in-process inventory when taxed, used solely in connection with Government work should be charged to such work.) [Subparagraph (5) added, 27 F.R. 11663, Nov. 29, 1962] tional institutions for performance of Defense contracts.) The use allowance for buildings and improvements shall be computed at an annual rate not to exceed two percent (2%) of acquisition cost. The use allowance for equipment shall be computed at an annual rate not exceeding six and two-thirds percent (6%%) of acquisition cost of usable equipment in those cases where the institution maintains current records with respect to such equipment on hand. Where the institution's records reflect only the cost (actual or estimated) of the original complement of equipment, the use allowance shall be computed at an annual rate not exceeding ten percent (10%) of such cost. In those cases where no equipment records are maintained, the institution will justify a reasonable estimate of the acquisition cost of usable equipment which may be used to compute the use allowance at an annual rate not exceeding six and twothirds percent (6%%) of such estimate. Computation of the use allowance shall exclude the portion of the cost of buildings and equipment paid for out of Federal funds and the cost of grounds; and CODIFICATION: § 15.304(e) was amended, 26 F.R. 2616, Mar. 28, 1961. Subsequently, the reference "§ 3.812" was changed to "§ 4.209", 27 F.R. 6139, June 29, 1962. § 15.305 Applicable costs. * (d) In determining the allowability of certain items of cost, § 15.307 provides standards to be applied and also identifies certain types of expenditures which relate solely to instruction; such costs of instruction, including applicable overhead, do not enter into the costs of research agreements either as direct costs or indirect costs. [Paragraph (d) amended, 26 F.R. 5309, June 14, 1961] § 15.306-2 Apportionment. Indirect costs shall be apportioned as between instruction and research activities, and other institutional activities as defined in § 15.302-6. The apportionment shall be made as follows: (a) General administration and general expenses, on the basis of total expenditures (exclusive of capital expenditures and use allowances), direct salaries and wages, or other bases appropriate in the circumstances. (b) Operation and maintenance of the physical plant, if not separately costed, -331 on the basis of total square or cubic footage of the buildings; and (c) Other types of indirect costs normally do not require apportionment; where they do, an equitable basis for making the apportionment should be selected. [26 F.R. 5309, June 14, 1961] § 15.306-4 Overhead determinations acceptable under special circumstances. (a) Indirect costs may be claimed at a rate which is anticipated to be less than that which would otherwise be allowable with provisions made in the research agreement for adjustment if actual costs subsequently proved to be less than the claimed rate. (b) Where the total direct cost of Government-sponsored research and development work at an institution does not exceed $250,000 in a year, the use of the following abbreviated procedure may be acceptable in the determination of allowable indirect costs. Under this abbreviated procedure, data taken directly from the institution's most recent annual financial report and immediately available supporting information will be utilized as a basis for dividing total expenditures (exclusive of expenditures for capital items and unallowable costs, as defined in § 15.307, and expenditures for student aid and for annuity payments) between expenditures applicable to the indirect expense pool, and other expenditures. The indirect expense pool shall be limited to the following categories of expense: (1) General administration and general expenses, inclusive of allocable salaries and expenses of deans of schools and department heads. (Where the allocable portion of the salaries and expenses of deans of schools and department heads is not available, a maximum of 20 percent of the total of such salaries and expenses may be included in the indirect expense pool.); (2) Operation and maintenance expenses; and (3) Library operating expenses. All categories of expense not specifically cited above will be grouped under "all other expenditures", including the expenses of research, education (including the items cited in § 15.307-2 (a) and (c)), and other institutional activities (as defined in § 15.302-6). The indirect expense rate will then be computed as Except as specifically noted, the following types of costs apply only to instruction and therefore do not enter into the costs of research agreements, either as direct costs or indirect costs, unless, notwithstanding § 15.305 (d), specific provision is made therefor in the research agreement: (a) Commencement and convocation costs; (b) Scholarships, fellowships, tuition and other forms of student aid costs. However, in certain cases such costs may be allocable in part to research agreements under the conditions set forth in § 15.307-3(b); (c) Student services costs, including such activities as deans of students, administration of student affairs, registrar, placement offices, student advisers, student health and infirmary services, and such other activities as are identifiable with student services. However, in the case of students actually engaged in work under research agreements, a proportion of student service costs measured by the relationship between hours of work by students on such research work and total student hours including all research time may be allowed as a part of research administration expenses. [26 F.R. 5310, June 14, 1961] § 15.307-3 Allowable and unallowable costs. (nn) Sabbatical leave costs. Sabbatical leave cost, including leave of absence to employees for performance of graduate work or sabbatical study, travel, or research, are allowable as indirect costs of the period in which paid, provided the institution has a uniform policy on sabbatical leave for persons engaged in instruction and persons engaged in research. Such costs shall This subpart prescribes general principles and procedures for the evaluation and determination of costs in connection with contracts and subcontracts for construction and architect-engineer services related to construction. The applicability of this subpart to costreimbursement type contracts is set forth in § 15.104 and its applicability to fixedprice type contracts is prescribed in Subpart F of this part. In addition, because of the unique nature of certain aspects of construction contracts, guidance is provided with respect to some elements of cost wherein the basis for determination of cost under cost-reimbursement type contracts differs from that used for evaluation of cost under fixed-price type contracts. § 15.401 Basic considerations. Except as otherwise provided in this subpart, because of the specialized nature of construction contracts, the allowability of costs shall be determined in accordance with Subpart B of this part, except to the extent that the provisions of that subpart are clearly inappropriate to construction contracts. § 15.401-2 Special factors affecting the allowability of costs of construction contracts. The scope of the work required under construction contracts may vary from routine projects of short duration to be performed within the contractor's home office locality to the erection of complex military installations at remote overseas locations over a period of several years. Climate and terrain may vary greatly among construction sites. All of these factors involving the nature, size, duration and location of a construction project generally affect the basic de |