[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR31.205-17]



[Page 618]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 31_CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents

 

          Subpart 31.2_Contracts With Commercial Organizations

 

Sec. 31.205-17  Idle facilities and idle capacity costs.



    (a) Definitions. As used in this subsection--

    Costs of idle facilities or idle capacity means costs such as 

maintenance, repair, housing, rent, and other related costs; e.g., 

property taxes, insurance, and depreciation.

    Facilities means plant or any portion thereof (including land 

integral to the operation), equipment, individually or collectively, or 

any other tangible capital asset, wherever located, and whether owned or 

leased by the contractor.

    Idle capacity means the unused capacity of partially used 

facilities. It is the difference between that which a facility could 

achieve under 100 percent operating time on a one-shift basis, less 

operating interruptions resulting from time lost for repairs, setups, 

unsatisfactory materials, and other normal delays, and the extent to 

which the facility was actually used to meet demands during the 

accounting period. A multiple-shift basis may be used in the calculation 

instead of a one-shift basis if it can be shown that this amount of 

usage could normally be expected for the type of facility involved.

    Idle facilities means completely unused facilities that are excess 

to the contractor's current needs.

    (b) The costs of idle facilities are unallowable unless the 

facilities--

    (1) Are necessary to meet fluctuations in workload; or

    (2) Were necessary when acquired and are now idle because of changes 

in requirements, production economies, reorganization, termination, or 

other causes which could not have been reasonably foreseen. (Costs of 

idle facilities are allowable for a reasonable period, ordinarily not to 

exceed 1 year, depending upon the initiative taken to use, lease, or 

dispose of the idle facilities (but see 31.205-42)).

    (c) Costs of idle capacity are costs of doing business and are a 

factor in the normal fluctuations of usage or overhead rates from period 

to period. Such costs are allowable provided the capacity is necessary 

or was originally reasonable and is not subject to reduction or 

elimination by subletting, renting, or sale, in accordance with sound 

business, economics, or security practices. Widespread idle capacity 

throughout an entire plant or among a group of assets having 

substantially the same function may be idle facilities.

    (d) Any costs to be paid directly by the Government for idle 

facilities or idle capacity reserved for defense mobilization production 

shall be the subject of a separate agreement.



[48 FR 42301, Sept. 19, 1983, as amended at 66 FR 2131, Jan. 10, 2001; 

67 FR 6120, Feb. 8, 2002]