charge non-agency users a higher proportion, not to exceed 100 percent of administrative overhead, than agency users if the agency has the authority to do so. If an aircraft is provided pursuant to an interagency agreement under the Economy Act of 1932 (31 U.S.C. 1535), the agency must charge based on the actual costs of the goods or services provided. For purposes of OMB Circular A-76 costs comparisons, agencies should compute the actual administrative costs that would be avoided if a decision is made to contract out the operation under study.

(6) Self-insurance costs. Aviation activity involves risks and potential casualty losses and liability claims. These risks are normally covered in the private sector by purchasing an insurance policy. The Government is self-insuring; the Treasury's General Fund is charged for casualty losses and/or liability claims resulting from accidents. For the purposes of analyses, Government managers will recognize a cost for "self-insurance" by developing a cost based on rates published by GSA's Aircraft Management Division.

(7) Depreciation. The cost or value of ownership. Aircraft have a finite useful economic or service life (useful life). Depreciation is the method used to spread the acquisition value, less residual value, over an asset's useful life. Although these costs are not direct outlays as is the case with most other aircraft costs, it is important to recognize them for analyses required by OMB and other cost comparison purposes and when replenishing a working capital fund by recovering the full cost of aircraft operations. Depreciation costs depend on aircraft acquisition or replacement costs, useful life, and residual or salvage value. To calculate the cost of depreciation that shall be allocated to each year, subtract the residual value from the total of the acquisition cost plus any capital improvements and, then, divide by the estimated useful life of the asset.

(c) Other costs. There are certain other costs of the aircraft program which should be recorded but are not appropriate for inclusion in either the variable or fixed cost categories for the purposes of justifying aircraft use or

recovering the cost of aircraft operations. These costs include:

(1) Accident repair costs. These costs include all parts, materials, equipment, and maintenance labor related to repairing accidental damage to airframes or aircraft equipment. Also included are all accident investigation costs.

(2) Aircraft costs. This is the basic aircraft inventory or asset account used as the basis for determining aircraft depreciation charges. These costs include the cost of acquiring aircraft and accessories, including transportation and initial installation. Also included are all costs required to bring aircraft and capitalized accessories up to fleet standards.

(3) Cost of capital. The cost of capital is the cost to the Government of acquiring the funds necessary for capital investments. The agency shall use the borrowing rate announced by the Department of the Treasury for bonds or notes whose maturities correspond to the manufacturer's suggested useful life or the remaining useful life of the asset.

§ 101-37.202 Policy.

Agencies shall maintain cost systems for their aircraft operations which will permit them to justify the use of Government aircraft in lieu of commercially available aircraft, or the use of one Government aircraft in lieu of another; recover the costs of operating Government aircraft when appropriate; determine the cost effectiveness of various aspects of their aircraft program; and conduct the cost comparisons to justify in-house operation of Government aircraft versus procurement of commercially available aircraft services. To accomplish these purposes, agencies must accumulate their aircraft program cost into the standard aircraft program cost elements specified in § 1010-37.201.

§ 101-37.203 [Reserved]

§ 101-37.204 Operations cost recovery methods.

Under 31 U.S.C. 1535, and various acts appropriating funds or establishing working funds to operate aircraft,

agencies are generally required to recover the costs of operating all aircraft in support of other agencies and other governments. Depending on the statutory authorities under which its aircraft were obtained or are operated, agencies may use either of two methods for establishing the rates charged for using their aircraft; full cost recovery rate or the variable cost recovery rate.

(a) The full cost recovery rate for an aircraft is the sum of the variable and fixed cost rates for that aircraft. The computation of the variable cost rate for an aircraft is described in §10137.304. The fixed cost recovery rate for an aircraft or aircraft type is computed as follows:

(1) Accumulate the fixed costs listed in §101-37.201(b) that are directly attributable to the aircraft or aircraft type. These costs should be taken from the agency's accounting system.

(2) Adjust the total fixed cost for inflation and for any known upcoming cost changes to project the new fixed total costs. The inflation factor used should conform to the provisions of OMB Circular A-76.

(3) Allocate operations and administrative overhead costs to the aircraft based on the percentage of total aircraft program flying hours attributable to that aircraft or aircraft type.

(4) Compute a fixed cost recovery rate for the aircraft by dividing the sum of the projected directly attributable fixed costs, adjusted for inflation, from paragraph (a)(2) of this section and the allocated fixed costs from paragraph (a)(3) of this section by the annual flying hours projected for the aircraft.

(b) The variable cost recovery rate is the total variable cost rate of operating an aircraft described in §101-37.304. If an agency decides to base the charge for using its aircraft solely on this rate, it must recover the fixed costs of those aircraft from the appropriations which support the mission for which the procurement of the aircraft was justified. In such cases, the fixed cost recovery rate may be expressed on an annual, monthly, or flying hour basis.

(c) To compute the full cost recovery rate of using a Government aircraft for a trip, add the variable cost recovery

rate for the aircraft or aircraft type to the corresponding fixed cost recovery rate and multiply this sum by the estimated number of flying hours for the trip using the proposed aircraft.

§ 101-37.205 Aircraft program cost effectiveness.

Although cost data are not the only measures of the effectiveness of an agency's aircraft program, they can be useful in identifying opportunities to reduce aircraft operational costs. These opportunities include changing maintenance practices, purchasing fuel at lower costs, and the replacement of old, inefficient aircraft with aircraft that are more fuel efficient and have lower operation and maintenance costs. The most common measures used to evaluate the cost effectiveness of various aspects of an aircraft program are expressed as the cost per flying hour or per passenger mile (one passenger flying one mile). These measures may be developed using the standard aircraft program cost elements (see §101-37.201) and include, but are not limited to: maintenance costs/ flying hours, fuel and other fluids/flying hours, and variable cost/passenger mile. GSA will coordinate the development of other specific cost-effective

ness

measures with the appropriate Interagency Committee for Aviation Policy subcommittees (ICAP).

(a) Maintenance costs per flying hour. Maintenance costs per flying hour identifies on an aggregate basis relative cost effectiveness of maintenance alternatives. This measure is among those necessary to identify and justify procurement of less costly aircraft.

(b) Fuel and other fluids cost per flying hour. Fuel per flying hour identifies the relative fuel efficiency of an individual aircraft. The measure identifies the requirement to replace inefficient engines or to eliminate fuel inefficient aircraft from the fleet.

(c) Crew costs-fixed per flying hour. When based on the total fixed crew costs and flying hours, can be used to determine the impact of crew utilization on overall operating costs; can also be used to compare crew utilization and salary levels among different agency or bureau aircraft programs.

(d) Operations overhead per flying hour. Operations overhead may be used on an aggregate basis (i.e., total operations overhead expenditures divided by hours flown) to compare the overhead activities in direct support of aircraft operations among agencies or bureaus. This factor can indicate excess overhead support costs.

(e) Administrative overhead per flying hour. Administrative overhead may be used on an aggregate basis (i.e., total administrative overhead divided by hours flown) to compare the level of administrative support to other agencies and bureaus.

Subpart 101-37.3-Cost Comparisons for Acquiring and Using Aircraft

SOURCE: 60 FR 3552, Jan. 18, 1995, unless otherwise noted.

§ 101-37.300 General.

The provisions of this subpart prescribe policies and procedures for conducting cost comparisons for the acquisition, use, or lease of aircraft. This subpart incorporates selected provisions of OMB Circulars A-76 and A-126.

§ 101-37.301 Applicability.

This subpart applies to all agencies in the executive branch of the Federal Government. It does not apply to the United States Postal Service, to the Government of the District of Columbia, or to non-Federal organizations receiving Federal loans, contracts, or grants.

§§ 101–37.302—101-37.303 [Reserved] § 101-37.304 Variable cost rate.

For the purpose of comparing costs (Government, commercial charter, and airline) associated with passenger transportation flights, as required by § 101-37.406, the agency should develop a variable cost rate for each aircraft or aircraft type as follows:

(a) Accumulate or allocate to the aircraft or aircraft type all historical costs, for the previous 12 months, grouped under the variable cost category defined in § 101-37.201. These costs should be obtained from the agency's accounting system.

(b) Adjust the historical variable costs for inflation and for any known upcoming cost changes to determine the projected variable cost. The inflation factor used should conform to the provisions of OMB Circular A-76.

(c) Divide the projected variable cost of the aircraft or aircraft type by the projected annual flying hours for the aircraft or aircraft type to compute the variable cost rate (per flying hour).

(d) To compute the variable cost for a proposed trip, multiply the variable cost rate by the estimated number of flying hours for the trip. The number of flying hours should include:

(1) If no follow-up trip is scheduled, all time required to position the aircraft to begin the trip and to return the aircraft to its normal base of operations.

(2) If a follow-on trip requires repositioning, the cost for respositioning should be charged to the associated follow-on trip.

(3) If an aircraft supports a multi-leg trip (a series of flights scheduled sequentially), the use of the aircraft for the total trip may be justified by comparing the total variable cost of the entire trip to the commercial aircraft cost (including charter) for all legs of the trip.

(a) The number and size of aircraft acquired by an agency and the capacity of those aircraft to carry passengers and cargo shall not exceed the level necessary to meet the agency's mission requirements.

(b) Agencies must comply with OMB Circular A-76 before purchasing, leasing, or otherwise acquiring aircraft and related services to assure that these services cannot be obtained from and operated by the private sector more cost effectively.

(c) Agencies shall review on a 5-year cycle the continuing need for all of their aircraft and the cost effectiveness of their aircraft operations in accordance with OMB approved cost justification methodologies. A copy of each agency review shall be submitted to GSA when completed and to OMB with the agency's next budget submission.

Agencies shall report any excess aircraft and release all aircraft that are not fully justified by these reviews.

(d) Agencies shall use their aircraft in the most cost effective way to meet their requirements.

Subpart 101-37.4-Use of Government-Owned and -Operated Aircraft

SOURCE: 58 FR 53660, Oct. 18, 1993, unless otherwise noted.

§ 101-37.400 General.

The provisions of this subpart prescribe policies and procedures for the use of Government aircraft. This subpart incorporates certain provisions of OMB Circular A-126 and OMB Bulletin Number 93-11.

§ 101-37.401 [Reserved]

§ 101-37.402 Policy.

Government aircraft shall be used for official purposes only in accordance with applicable laws and regulations, including this subpart.

(a) Use of Government aircraft. Agencies shall operate Government aircraft only for official purposes. Official purposes include the operation of Government aircraft for:

(1) Mission requirements, and

(2) Other official travel.

(b) Use of Government aircraft for official travel or on space available travel is subject to paragraphs (b)(1) and (2) of this section.

(1) Use of a Government aircraft for official travel other than required use travel or mission requirement travel; i.e., for the conduct of agency business, shall be authorized only when:

(i) No commercial airline or aircraft service (including charter) is reasonably available to fulfill effectively the agency's requirement; or

(ii) The actual cost of using a Government aircraft is not more than the cost of commercial airline or aircraft service (including charter). When a flight is made for mission requirements or required use travel (and is certified as such in writing by the agency which is conducting the mission), it is presumed that secondary use of the aircraft for other travel for the conduct of

agency business will result in cost savings.

(2) Use of a Government aircraft on a space available basis is authorized only when:

(i) The aircraft is already scheduled for use for an official purpose;

(ii) Space available travel does not require a larger aircraft than needed for the already scheduled official purpose;

(iii) Space available use results in no, or only minor, additional cost to the Government; and

(iv) Reimbursement is provided as set forth in § 101-37.403 of this subpart.

(c) The Secretary of State, Secretary of Defense, Attorney General, Director of the Federal Bureau of Investigation, and the Director of Central Intelligence may use Government aircraft for travel other than:

(1) To meet mission requirements, or (2) For the conduct of agency business, but only upon reimbursement at full coach fare and with authorization by the President or his designated representative on the grounds that a threat exists which could endanger lives or when continuous 24-hour secure communication is required.

§ 101–37.403 Reimbursement for the use of Government aircraft.

A passenger transported by Government aircraft is required to reimburse the Government under the circumstances specified, and in the amount indicated, in paragraphs (a) through (d) of this section.

(a) For travel that is not required use travel:

(1) Any incidental private activities (personal or political) of an employee undertaken on an employee's own time while on official travel shall not result in any increase in the actual costs to the Government of operating the aircraft, and

(2) The Government shall be reimbursed the appropriate share of the full coach fare for any portion of the time on the trip spent on political activities (except as otherwise provided in paragraph (d) of this section).

(b) For required use travel (except as otherwise provided in paragraph (d) of this section).

(1) For a wholly personal or political trip, the Government shall be reimbursed the full coach fare for the trip, (2) For an official trip during which the employee engages in political activities, the Government shall be reimbursed the appropriate share of the full coach fare for the entire trip, and

(3) For an official trip during which the employee flies to one or more locations for personal reasons, the Government shall be reimbursed the excess of the full coach fare of all flights taken by the employee on the trip over the full coach fare of the flights that would have been taken by the employee had there been no personal activities on the trip.

(c) For space available travel, whether on mission requirements or other flights, the Government shall be reimbursed at the full coach fare except:

(1) As authorized under 10 U.S.C. 4744 and regulations implementing that statute, and

(2) By civilian personnel and their dependents in remote locations not reasonably accessible to regularly scheduled commercial airline service.

(d) In any case of political travel, reimbursement shall be made in the amount required by law or regulation (e.g., 11 CFR 106.3) if greater than the amount otherwise required under paragraphs (a) through (c) of this section.

§ 101-37.404 Approving the use of Government aircraft for transportation of passengers.

(a) Use of Government aircraft for official travel may be approved only by the agency head or official(s) designated by the agency head.

(b) Whenever a Government aircraft used to fulfill a mission requirement is used also to transport senior Federal officials, members of their families or other non-Federal travelers on a space available basis (except as authorized under 10 U.S.C. 4744 and regulations implementing that statute), the agency that is conducting the mission shall certify in writing prior to the flight that the aircraft is scheduled to perform a bona fide mission activity, and that the minimum mission requirements have not been exceeded in order to transport such space available travelers. In emergency situations,

an

after-the-fact written certification by the agency is permitted.

[60 FR 3552, Jan. 18, 1995]

§ 101-37.405 Approving travel on Government aircraft.

Policy and practices under which travel on Government aircraft may be approved by the agency are specified in paragraphs (a) through (c) of this section.

(a) All travel on Government aircraft must have advance authorization by the sponsoring agency in accordance with its travel policies, OMB Circular A-126 and, when applicable, documented on an official travel authorization. Where possible, such travel authorization must be approved by at least one organizational level above that of the person(s) traveling. If review by a higher organizational level is not possible, another appropriate approval is required.

(b) All required use travel must have written approval on a trip-by-trip basis from the agency's senior legal official or the principal deputy, unless:

(1) The President has determined that all travel or travel in specified categories by an agency head is qualified as required use travel, or

(2) The agency head has determined that all travel or travel in specified categories by an officer or employee other than the agency head, is qualified as required use travel.

(i) Any determination by an agency head that travel by an officer or employee of that agency qualifies as required use travel must be in writing and set forth the basis for that determination. In emergency situations an after-the-fact written certification by an agency is permitted.

(ii) An agency head opting to determine that travel by an officer or employee may be required use travel shall establish written standards for determining when required use travel is permitted. Such travel shall not be permitted unless the travel is in conformance with the written standards.

(c) All travel by senior Federal officials, family members of senior Federal officials, and non-Federal travelers that is not to meet mission requirements or required use travel must be authorized in advance and in writing.