(DoD, see Class Deviation below)
Also: See Class Deviation 2007-O0007: Utilities Privatization.
Interest on borrowings (however represented), bond discounts, costs of financing and refinancing capital (net worth plus long-term liabilities), legal and professional fees paid in connection with preparing prospectuses, costs of preparing and issuing stock rights are unallowable (but see 31.205-28). However, interest assessed by State or local taxing authorities under the conditions specified in 31.205-41(a)(3) is allowable.
OFFICE OF THE UNDER SECRETARY OF DEFENSE
3000 DEFENSE, PENTAGON
WASHINGTON, DC, 20301-3000
ACQUISTION, TECHNOLOGY
AND LOGISTICS
DP(DAR)
MEMORANDUM FOR DRECT'ORS OF DEFEENSE AGENCIES
DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,ASN (RD&A) /ABM
DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE (CONTRACTING) SAF/AQC
DEPUTY ASSISTANT SECRETARY OF THE ARMY (PROCUREMENT)
COMMANDER, DEFENSE CONTRACT MANAGEMENT COMMAND, DEFENSE LOGISTICS AGENCY
SUBJECT : Class Deviation - Interest Cost
I authorize a class deviation from the cost principle at Federal Acquisition Regulation (FAR) 31.205-20, Interest and other financial costs, for utilities privatization contracts under which previously Government-owned utility systems are conveyed by a Military Department or Defense Agency to a contractor. Pursuant to this deviation, the utilities privatization contractor will be permitted to recover its interest costs associated only with capital expenditures to acquire, renovate, replace, upgrade, and/or expand utility systems, and the contractor will not be permitted to receive facilities capital cost of money as a contract cost under FAR 31.205-10, Cost of money. Interest rates used to calculate allowable interest costs pursuant to this class deviation must be limited to 600 basis points above the Contract Disputes Act interest rate (41 U.S.C. 611) in effect at the time the contractor makes the capital expenditure. This class deviation is effective for utilities privatization contracts awarded from May 1. 2002 through April 30, 2007. Questions about this deviation may be addressed to Mr. Christopher Werner at (703) 695-9764, or [email protected].
