EP 1110-1-8
(Vol. 3)
31 July 03
Operating labor
Mobilization and demobilization
Field office overhead expenses
Home office or general and administrative (G&A) overhead expenses
Investment tax credit
Contingency allowance
Profit
Parts and labor escalation
It should also be noted that replacement cost is not included in the rates, as
it is not an allowable item of cost per FAR 31.105(d)(2)(i).
d. Other Ownership Elements. The following elements of cost are not included
in the total hourly rates. These costs are allowable and would normally be included in
the contractor's field office or home office overhead rate calculation.
(1) License fees, property taxes, storage, and insurance costs are
considered indirect costs and are not included in the total hourly rates.
(2) Jobsite security, inspection fees, recordkeeping, mechanic's training,
and highway permits are also not included in the total hourly rates.
SECTION II. OPERATING CONDITIONS
2.4
Average, Difficult, or Severe Conditions
Operating conditions may be average, difficult, or severe. Hourly rates for both
average and severe operating conditions are determined in accordance with
appendix C. The rate for the difficult condition is the arithmetic mean of the average
and the severe rates. If only the average rate is shown in table 2-2, the rate will apply
for all operating conditions or as determined by the contracting officer. Average
condition rates are included in both table 2-1 and table 2-2. Only table 2-2 contains the
severe condition rates.
2.5
Determination of Condition
For contract modifications, the contracting officer determines the equipment
operating condition to be used. This determination is based on contract specifications,
site conditions, basis of any supporting evidence, and guidance in appendix C.
Evaluation of operating conditions for equipment not listed in appendix C will be
consistent with examples shown in appendix C. The operating condition of the
equipment relates to the average and severe factors as detailed in appendix D.
2-2
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