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    Is the cost of the locks (which must be sent to acquisition for purchase due to the amount) part of the in-house cost, or is this cost not to be included as part of the in-house cost and therefore would violate the 49/51% rule. HELP!


    Answer

    From previously submitted Ask A Professor questions on the topic, the following answer might be helpful:
    Project orders are addressed in the Financial Management Regulation Chapter 11 and the paragraphs provided discuss the need for the receiving activity to perform not less than 51% of the total work and the receiving activity must be a DoD Owned Establishment.  There is no definition provided in the FMR for what constitutes in-house work, but generally in-house refers to the production of some commodity or service, using a Command's own staff and/or resources.  If funding must be placed on contract to procure the equipment, it would not be considered as part of the in-house costs and would not be part of the 51% of the work required to be done by the receiving activity.

    020515. Ability to Perform. Project orders shall be issued only to those DoD owned establishments that are capable of substantially performing the work ordered.  "Substantially," as used in this paragraph, means that the project order recipient should incur DoD Financial Management Regulation Volume 11A, Chapter 2 2-7 costs of not less than 51 percent of the total costs attributable to rendering the work or services ordered. Total costs to render the work or services ordered include the costs of goods or services obtained from/provided by contractors.

    020303. DoD Owned Establishment. A "DoD owned establishment" for the purpose of this chapter is any DoD owned and operated activity (i.e., not contractor owned or operated). Such activities include working capital fund activities; other revolving fund activities; and appropriated fund activities provided the appropriated funded activity engages in reimbursable operations that are not reasonably severable into fiscal year segments and those reimbursable operations can be forecasted with reasonable accuracy. Examples of such activities include equipment overhaul or maintenance shops, manufacturing or processing plants or shops, research and development laboratories, computer software design activities, testing facilities, and proving grounds owned and operated by the Department.
     
    As always, you should consult with your local financial management personnel for interpretation of the policies within your activity.
     



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