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against an applicable ADP Schedule contract under the terms of the contract, provided such action meets the requireIments for competition set forth in § 14.1107-2; or

(b) The total procurement for the specific software package does not exceed $7,500 annual lease cost, excluding maintenance, or $10,000 purchase cost;

or

(c) The software is provided by the original equipment manufacturer and is not separately priced from the ADPE. § 1-4.1103-3 Maintenance services.

When approved by GSA, the ADP Fund may be used by agencies to obtain maintenance services for ADPE leased from GSA through the ADP Fund. In addition, agencies may procure maintenance services without prior approval of GSA when:

(a) Such services are available from an ADP Schedule contract under the terms and conditions of that contract, provided the procurement meets the requirement for competition set forth in 1-4.1107-2; or

(b) The procurement does not exceed $50,000 annually.

$1-4.1103-4 Automatic data processing fund.

When a lease/purchase evaluation indicates that it would be to the best interest of the Government to purchase rather than lease APDE or software and funds are not readily available within the agency; e.g., when there is insufficient time to secure the necessary funds to reprogram for the required funds, the matter shall be forwarded to GSA in the manner prescribed in FPMR 10132.407.

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number of an individual within the agency who shall act as the point of contact with GSA. The APR shall include:

(a) Copies of the proposed solicitation document, if available. If the solicitation document is not available, the specifications of the ADPE configuration that is to be acquired shall be inIcluded (see 1-4.1102-6). The description should reflect the estimated number of central processing units, storage devices and controllers, terminals, other peripheral devices and communications devices.

(b) Estimated dollar value of the procurement.

(c) Estimated system or item life (see § 1-4.1102-11).

(d) Location (city and state) of the data processing facilities involved.

(e) Fiscal quarter during which the solicitation is expected to be released to industry for procurement action.

(f) Unique software, maintenance, and support requirements, if any.

(g) A statement or other evidence which indicates that a performance evaluation has been made of currently installed ADP system(s), when applicable, to ensure that the proposed procurement represents the lowest overall cost alternative for meeting the agency's data processing need;

(h) Evidence that site construction/ modification is, or is not, required (see FPMR 101-17.101-5). One of the following statements shall be used for this purpose:

(1) The acquisition of this equipment will not require site construction or modification by GSA, or

(2) The acquisition of this equipment will require site (construction) (modification) by GSA which must be completed by (date); and

(i) The APR shall contain a statement that the need to acquire ADPE or ADP systems has been documented as required by Federal Management Circular 74-5.

(j) The APR shall include a statement that in accordance with the requirements of Subpart 101-32.2 and Subpart 101-32.3 of the Federal Property Management Regulations, available ADP resources have been screened and no ADP resources are available to satisfy the user's requirements.

(k) A justification, if applicable, to support either a contemplated noncompetitive (sole source) procurement or

§ 1-3.1218

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tion.

Subsections under this § 1-3.1219 address specific topics where it has been determined that the contracting community might benefit from such treatment. In addition, the Cost Accounting Standards Board often includes preambles in the FEDERAL REGISTER issue that promulgates rules, regulations, and standards in order to provide readers with administrative history and other commentary. These preambles are also included in Title 4 of the Code of Federal Regulations which is for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Temporary requirements or informational guidance may also be published from time to time as FPR temporary regulations or FPR Bulletins. 141 FR 47238, Oct. 28, 1976]

§ 1-3.1220 Standards prescribed by the Cost Accounting Standards Board.

(a) The text of the Cost Accounting Standards Board standards are set forth in the subsections following, using the numbering system of 4 CFR Subchapter G of Chapter III.

NOTE: This section of the FPR is included for the convenience of procurement personnel. Users are cautioned that the CASB will publish additional standards from time to time. They will become effective for both defense and nondefense contracts following publication in the FEDERAL REGISTER on the date specified by the CASB, even though a Standard has not, on that date, been republished in the FPR.

(b) Definitions promulgated by the Cost Accounting Standards Board are set forth herein. Unless the text of a particular standard demands a different definition or the definition is expressly modified for a particular standard, terms defined herein whenever used in any standard shall have

the meanings

ascribed to them in this paragraph (b). For convenience, the definitions of terms which are prominent in an individual standard are reprinted in that standard. The selection or non-selection of a particular definition to be reprinted in an individual standard, however, does not affect the applicability of all definitions in this paragraph (b) to that standard.

Additional definitions as they are pro-
mulgated by the CASB will not necessar-
ily listed alphabetically.

(1) Profit center. The smallest organizationally independent segment of a company which has been charged by management with profit and loss responsibilities.

(2) Accumulating costs. The collecting of cost data in an organized manner, such as through a system of accounts.

(3) Actual cost. An amount determined on the basis of cost incurred as forecasted from cost. distinguished Includes standard cost properly adjusted for applicable variance.

(4) Allocate. To assign an item of cost, or a group of items of cost, to one or more cost objectives. This term includes both direct assignment of cost and the reassignment of a share from an indirect cost pool.

(5) Asset accountability unit. A tangible capital asset which is a component of plant and equipment that is capitalized when acquired or whose replacement is capitalized when the unit is removed, transferred, sold, abandoned, demolished, or otherwise disposed of.

(6) Cost objective. A function, organizational subdivision, contract or other work unit for which cost data are desired and for which provision is made to acthe cost of cumulate and processes, products, jobs, capitalized projects, etc.

measure

(7) Direct cost. Any cost which is identified specifically with a particular final cost objective. Direct costs are not limited to items which are incorporated in the end product as material or labor. Costs identified specifically with a contract are direct costs of that contract. All costs Identified specifically with other final cost objectives of the contractor are direct costs of those cost objectives.

(8) Directly associated cost. Any cost which is generated solely as a result of the incurrence of another cost, and which would not have been incurred had the other cost not been incurred.

(9) Estimating Costs. The process of forecasting a future result in terms of cost, based upon information available at the time.

(10) Expressly unallowable cost. A particular item or type of cost which, under the express provisions of an applicable law, regulation, or contract, is specifically named and stated to be unallowable.

(11) Final cost objective. A cost objective which has allocated to it both direct and indirect costs, and, in the contractor's accumulation system, is one of the final accumulation points.

(12) Fiscal year. The accounting period for which annual financial statements are regularly prepared, generally a period of 12 months, 52 weeks, or 53 weeks.

(13) Home office. An office responsible for directing or managing two or more, but not necessarily all, segments of an organization. It typically establishes policy for, and provides guidance to the segments in their operations. It usually performs management, supervisory, or administrative functions, and may also perform service functions in support of the operations of the various segments. An organization which has intermediate levels, such as groups, may have several home offices which report to a common home office. An intermediate organization may be both a segment and a home office.

(14) Indirect cost. Any cost not directly identified with a single final cost objective, but identified with two or more final cost objectives or with at least one intermediate cost objective.

(15) Indirect cost pool. A grouping of incurred costs identified with two or more objectives but not identified specifIcally with any final cost objective.

(16) Labor cost at standard. A preestablished measure of the labor element of cost, computed by multiplying laborrate standard by labor-time standard.

(17) Labor-rate standard. A preestablished measure, expressed in monetary terms, of the price of labor.

(18) Labor-time standard. A preestablished measure, expressed in temporal terms, of the quantity of labor.

(19) Material cost at standard. A preestablished measure of the material element of cost, computed by multiplying material-price standard by materialquantity standard.

(20) Material-price standard. A preestablished measure, expressed in monetary terms, of the price of material.

(21) Material-quantity standard. A pre-established measure, expressed in physical terms, of the quantity of material.

(22) Operating revenue. Amounts accrued or charged to customers, clients. and tenants for the sale of products manufactured or purchased for resale, for services, and for rentals of property held primarily for leasing to others. It in

cludes both reimbursable costs and fees under cost-type contracts and percentage-of-completion sales accruals except that it includes only the fee for management contracts under which the contractor acts essentially as an agent of the Government in the erection or operation of Government-owned facilities. It excludes incidental interest, dividends, royalty, and rental income, and proceeds from the sale of assets used in the business.

(23) Original complement of low cost equipment. A group of items acquired for the initial outfitting of a tangible capital asset or an operational unit, or a new addition to either. The items in the group individually cost less than the minimum amount established by the contractor for capitalization for the classes of assets acquired but in the aggregate they represent a material investment. The group, as a complement, is expected to be held for continued service beyond the current period. Initial outfitting of the unit is completed when the unit is ready and available for normal operations.

(24) Pricing. The process of establishing the amount or amounts to be paid in return for goods or services.

(25) Production unit. A grouping of activities which either uses homogeneous inputs of direct material and direct labor or yields homogeneous outputs such that costs or statistics related to these homogeneous inputs or outputs are appropriate as bases for allocating vari...

ances.

(26) Proposal. Any offer or other submission used as a basis for pricing a contract, contract modification or termination settlement or for securing payments thereunder.

(27) Repairs and maintenance. Maintenance is the regularly recurring activIty of keeping assets in normal or expected operating condition. Repair is the activity of putting them back into normal or expected operating condition. The total endeavor to obtain the expected service during the life of tangible capital assets is generally called repairs and maintenance.

(28) Reporting costs. Provision of cost Information to others. The reporting of costs involves selecting relevant cost data and presenting it in an intelligible manner for use by the recipient.

(29) Segment. One of two or more divisions, product departments, plants, or other subdivisions of an organization reporting directly to a home office, usually

§ 1-3.1220

identified with responsibility for profit and/or producing a product or service. The term includes Government-owned contractor-operated (GOCO) facilities, and joint ventures and subsidiaries (domestic and foreign) in which the organization has a majority ownership. The term also includes those joint ventures and subsidiaries (domestic and foreign) in which the organization has less than a majority of ownership, but over which it exercises control.

(30) Standard cost. Any cost computed with the use of pre-established

measures.

(31) Tangible capital asset. An asset that has physical substance, more than minimal value, and is expected to be held by an enterprise for continued use or possession beyond the current accounting period for the services it yields.

(32) Unallowable cost. Any cost which, under the provisions of any pertinent law, regulation, or contract, cannot be Included in prices, cost reimbursements, Government or settlements under contract to which it is allocable. (33) Variance. The difference between a pre-established measure and an actual

measure.

a

(34) Compensated personal absence. Any absence from work for reasons such as illness, vacation, holidays, jury duty or military training, or personal activities, for which an employer pays compensation directly to an employee in accordance with a plan or custom of the employer.

(35) Entitlement. An employee's right, whether conditional or unconditional, to receive a determinable amount of compensated personal absence, or pay in lieu thereof.

(36) Residual value. The proceeds (less removal and disposal costs, if any) realized upon disposition of a tangible capital asset. It usually is measured by the net proceeds from the sale or other disposition of the asset, or its fair value if the asset is traded in on another asset. The estimated residual value is a current forecast of the residual value.

(38) Cost input. The cost, except G&A expenses, which for contract costing purposes is allocable to the production of goods and services during a cost accounting period.

and

administrative

(39) General (G&A) expense. Any management, financial, and other expense which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole. G&A expense does not include those management expenses whose beneficial or causal relationship to cost objectives can be more directly measured by a base other than a cost input base representing the total activity of a business unit during a cost accounting period.

(40) Business unit. Any segment of an organization, or an entire business organization which is not divided into segments.

(41) Category of material. A particular kind of goods, comprised of identical or interchangeable units, acquired or produced by a contractor, which are intended to be sold, or consumed or used in the performance of either direct or indirect functions.

(42) Material inventory record. Any record used for the accumulation of actual or standard costs of a category of material recorded as an asset for subsequent cost allocation to one or more cost objectives.

(43) Moving average cost. An inventory costing method under which an average unit cost is computed after each acquisition by adding the cost of the newly acquired units to the cost of the units of inventory on hand and dividing this figure by the new total number of units.

(44) Weighted average cost. An inventory costing method under which an average unit cost is computed periodically by dividing the sum of the cost of beginning inventory plus the cost of acquisitions, by the total number of units included in these two categories.

(45) Accrued benefit cost method. An actuarial cost method under which units of benefit are assigned to each cost accounting period and are valued as they accrue that is, based on the services performed by each employee in the period involved. The measure of normal cost under this method for each cost accounting period is the present value of the units of benefit deemed to be credited to employees for service in that period.

(37) Service life. The period of usefulness of a tangible capital asset (or group of assets) to its current owner. The period may be expressed in units of time or output. The estimated service life of a tangible capital asset (or group of assets) is a current forecast of its service life and is the period over which depreciation cost is to be assigned.

The measure of the actuarial liability at a plan's inception date is the present value of the units of benefit credited to employees for service prior to that date. (This method is also known as the Unit Credit cost method.)

(46) Actuarial assumption. A prediction of future conditions affecting pension cost; for example, mortality rate, employee turnover, compensation levels, pension fund earnings, changes in values of pension fund assets.

(47) Actuarial cost method. A technique which uses actuarial assumptions to measure the present value of future pension benefits and pension fund administrative expenses, and which assigns the cost of such benefits and expenses to cost accounting periods.

(48) Actuarial gain and loss. The effect on pension cost resulting from differences between actuarial assumptions and actual experience.

(49) Actuarial liability. Pension cost attributable, under the actuarial cost method in use, to years prior to the date of a particular actuarial valuation. As of such date, the actuarial liability represents the excess of the present value of the future benefits and administrative expenses over the present value of future contributions for the normal cost for all plan participants and beneficiaries. The excess of the actuarial liability over the value of the assets of a pension plan is the Unfunded Actuarial Liability.

(50) Defined-benefit pension plan. A pension plan in which the benefits to be paid or the basis for determining such benefits are established in advance and the contributions are intended to provide the stated benefits.

pension

(51) Defined-contribution plan. A pension plan in which the contributions to be made are established in advance and the benefits are determined thereby.

(52) Funded pension cost. The portion of pension costs for a current or prior cost accounting period that has been paid to a funding agency or, under a pay-as-you-go plan, to plan participants or beneficiaries.

(53) Funding agency. An organization or individual which provides facilities to receive and accumulate assets to be used either for the payment of benefits under a pension plan, or for the purchase of such benefits.

(54) Multiemployer pension plan. A plan to which more than one employer contributes and which is maintained pursuant to one or more collective bargaining agreements between an employee organization and more than one employer.

(55) Normal cost. The annual cost attributable, under the actuarial cost method in use, to years subsequent to a particular valuation date.

(56) Pay-As-You-Go cost method. A method of recognizing pension cost only when benefits are paid to retired employees or their beneficiaries.

(57) Pension plan. A deferred compensation plan established and maintained by one or more employers to provide systematically for the payment of benefits to plan participants after their retirement: Provided, That the benefits are paid for life or are payable for life at the option of the employees. Additional benefits such as permanent and total disability and death payments, and survivorship payments to beneficiaries of deceased employees may be an integral part of a pension plan.

(58) Projected benefict cost method. Any of the several actuarial cost methods which distribute the estimated total cost of all of the employees' prospective benefits over a period of years, usually their working careers.

(59) Cost of capital committed to facilities. An imputed cost determined by applying a cost of money rate to facilities capital.

(60) Facilities capital. The net book value of tangible capital assets and of those intangible capital assets that are subject to amortization.

(61) Intangible capital asset. An asset that has no physical substance, has more than minimal value, and is expected to be held by an enterprise for continued use or possession beyond the current accounting period for the benefits it yields. [39 FR 43058, Dec. 10, 1974, as amended at 40 FR 60025, Dec. 31, 1975; 41 FR 47238, Oct. 28, 1976]

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