Schedule to Regulation PR No. 30/53

Transcription

1 Schedule to Regulation PR No. 30/53 Rules for the Determination of Cost Prices Contents Page I. General 5 1. Scope 5 2. Contractor's Accounting System 5 3. Declaration by the Contractor 5 II. Determination of Prices on the Basis of Cost 6 4. Costs and Cost Prices 6 5. Ways of Determining Prices on the Basis of Cost 6 6. Types of Cost Prices 7 7. Quantities 7 8. Valuation 7 9. General Information to Be Furnished with Price Calculations Price Calculation Format 9 III. Elements of the Cost Price 10 A. Materials Direct Materials External Processing Auxiliary Materials and Factory Supplies Special Tooling Fuels and Energy 12

2 Determination of Quantities Valuation Cost of Goods Purchased Goods Supplied by Contractor-owned Plants Furnished Materials Residual Materials 14 B. Wages, Salaries and Other Labor Costs Allocation Allowability Valuation Social Costs 16 C. Maintenance and Repair Allowability 17 D. Development, Design and Test Contracts "Independent" and "Contractsponsored" Development Verification of Costs 17 E. Production Startup, Design Modifications Allowability 18 F. Taxes, Fees and Contributions Taxes Equalization of Burdens Levies Fees and Contributions 19

3 - 3 - G. Licenses, Patents and Protection of Industrial Property Allowability and Allocation 19 H. Rents, Office, Advertising and Transportation Costs, etc Quantities and Valuation 20 J. Special Selling Costs Agents' Commissions Terms of Delivery and Delivery Costs 21 K. Imputed Costs 21 a) Depreciation of Fixed Assets Definition Depreciation Charge and Valuation Method Useful Life Adjustment of Replacement Value (obsolete) Special Depreciation Charges Records of Fixed Assets 22 b) Interest Allowability Determination of Operating Capital Valuation of Operating Assets Volume of Operating Assets 25 c) Individual Risks Definition Allocation Determination of Contingencies Verification 26

4 - 4 - L. Contractor's Fee Definition Allowability 27

5 - 5 - I. GENERAL 1. Scope (1) These Rules govern the determination of prices on the basis of cost a) where regulations or decrees aa) prescribe the application of these Rules, or bb) give the contracting public agency the right to demand that these Rules be applied and the contracting public agency so demands; b) where the contracting public agency and the contractor, in compliance with price law, agree to apply these Rules. (2) In particular, they govern price determination in all contracts providing for pricing according to sections 5 to 8 of Regulation PR No. 30/53 on Pricing in Public Contracts of 21 November 1953 (BAnz No. 244 of 18 December 1953). 2. Contractor's Accounting System The contractor is required to maintain an orderly accounting system which will at any time permit the determination of costs and output, the reconciliation of cost and output accounts with the income and expense accounts and the determination of prices on the basis of cost. 3. Declaration by the Contractor The contracting public agency may request the contractor to make a declaration to the effect a) that the prices used in the determination of prices on the basis of cost are allowable under the provisions of price law, and b) that these Rules have been complied with in the determination of prices on the basis of cost.

6 - 6 - II. DETERMINATION OF PRICES ON THE BASIS OF COST 4. Costs and Cost Prices (1) Costs are computed from the quantity and value of the goods and services used in the performance of the contract. (2) In the determination of prices on the basis of cost as defined in these Rules, only those costs will be considered which, in their nature and amount, do not exceed those which, given efficient operation of the enterprise, would be incurred in the performance of the contract. (3) The cost price as defined in these Rules equals the total allowable cost of the contract as determined in accordance with these Rules plus the contractor's fee (see paragraphs 51 and 52 below). (4) Where the contractor's accounting system operates on principles that differ from the provisions of these Rules, particularly with regard to valuation, the costs allowable under these Rules for the purposes of cost price determination may be derived from the contractor's accounts by way of additions and deductions, provided that this does not affect verifiability. 5. Ways of Determining Prices on the Basis of Cost The different ways of determining prices on the basis of cost can be classified (1) according to time: a) forward costing (cost computations on the basis of predetermined costs prior to contract performance); b) historical costing (cost computations on the basis of actual costs after contract performance); (2) by method: a) process costing (division method, equivalent unit method); b) job-order costing (batch costing, single-item costing); c) combinations of a) and b).

7 Types of Cost Prices Cost-based prices may be established a) by forward costing, either as fixed prices or as target prices; b) by historical costing, as cost reimbursement prices; c) by forward costing for some cost categories and historical costing for the remaining cost categories. 7. Quantities (1) Unless section III of these Rules provides otherwise, and with due regard to the principle of efficiency in operations, the quantities used in determining prices will be a) where prices are determined by forward costing, the goods and services to be used in the performance of the contract as estimated at the time of submission of the bid; b) where prices are determined by historical costing, the goods and services actually used in the performance of the contract. (2) Where prices are determined by forward costing for some cost categories and by historical costing for the remaining cost categories, the provisions of subparagraph (1) above will apply to the respective cost categories as appropriate. 8. Valuation (1) For the purposes of the valuation of goods and services, any priorstage taxes and amounts deductible according to sections 15 and 28 of the Turnover Tax (Value-Added Tax) Act will not be considered. Priorstage taxes and amounts not deductible under those provisions are allowable costs within the meaning of paragraph 4 above.

8 - 8 - (2) Unless section III of these Rules provides otherwise, the valuation of goods and services will be based a) where prices are determined by forward costing, on prices current at the time of submission of the bid; b) where prices are determined by historical costing, on acquisition cost if goods or services were specifically purchased for performance under the contract or, if materials were not specifically purchased but were issued from stock, on prices current at the time of issue. (3) Where prices are determined by forward costing for some cost categories and by historical costing for the remaining cost categories, the provisions of subparagraph (2) above will apply to the respective cost categories as appropriate. 9. General Information to Be Furnished with Price Calculations (1) With every price calculation the following information will be furnished: a) an exact identification of the goods or services to which the calculation relates (contract number, bill-of-materials number, drawing number, drawing changes, design or model number, etc.); b) the supplying plant and the production department; c) the overall quantity (units, kg m, etc.) produced or to be produced to which the calculation refers; d) the date of completion of the calculation; e) the overall quantity delivered or to be delivered to which the calculation applies; f) the terms of delivery as far as they influence the cost price. (2) Where pricing is based on historical costing, the following additional information is required: a) the period of performance; b) any similar goods or services previously supplied or yet to be supplied under contracts awarded or promised.

9 Price Calculation Format (1) Subject to the provisions of paragraphs 2 and 4 (4) above, the contracting public agency and the contractor may agree to use specific calculation formats for forward costing and historical costing. (2) The calculation formats used for forward costing and historical costing respectively will follow a uniform pattern so as to permit comparisons. (3) Subject to paragraph 2 above, and unless subparagraphs (4) and (6) below provide otherwise, costs will be broken down at least into the following categories, provided, however, that any further breakdown in accordance with the contractor's usual practice or otherwise agreed upon and meeting the requirements of a verifiable price calculation shall not be excluded: Cost of direct materials (including materials overhead) Manufacturing cost excluding direct materials Development and design costs Administrative costs Selling costs Total cost Contractor's free Cost price (4) If the costing method used (see paragraph 5 (2) above) permits and where this is the usual practice of the trade, direct and indirect costs will be stated separately for each cost category. If appropriate, direct costs will be broken down into manufacturing direct costs and special direct costs. Special costs that have to be identified according to section III of these Rules will be included in the appropriate cost categories. (5) A subtotal "cost of goods manufactured" will be entered where it customarily appears in accordance with the usual practice of the trade or the individual contractor.

10 (6) To ensure efficiency in accounting, the following indirect costs may be grouped together: Materials overhead and manufacturing overhead; Administrative expenses and selling expenses. (7) If the accounting system permits, and provided that the principles of orderly accounting according to paragraph 2 above are observed, historical costing may be confined to determining variations from forward-costing data. (8) Where the contractor has supplied identical or similar goods or services under previous contracts, the price may be derived from the historical cost data for these contracts making allowance for any cost changes that may have occurred. III. ELEMENTS OF THE COST PRICE A. Materials 11. Direct Materials (1) Direct materials include a) raw materials (including semifinished goods that become part of the finished product); b) goods in process (products at the various stages of the production process or parts entering into the final product that are not self-contained products manufactured for sale as part of the production program); c) externally procured finished goods (completely processed goods made by other manufacturers on the basis of the contractor's own or other drawings, designs, etc. that are incorporated into the contractor's own products). (2) Reference is made to paragraph 13 (3) below.

11 External Processing (1) External processing includes the use of preprocessed goods made of contractor-furnished materials and the performance of certain manufacturing processes by other manufacturers (farming out). (2) Where contractor-furnished materials are processed by other manufacturers, the costs of this external processing will be recording as a separate item of cost and will be shown as a separate position in the price calculation. The same applies to work farmed out to other manufacturers. (3) Manufacturing overhead incurred by the contractor may not be charged to work farmed out to other manufacturers. 13. Auxiliary Materials and Factory Supplies (1) Auxiliary materials will be treated as direct materials unless they are classified as indirect costs for accounting reasons. (2) Factory supplies are not direct materials. (3) Direct materials, auxiliary materials and factory supplies will be uniformly and consistently defined. 14. Special Tooling (1) Special tooling is all equipment used exclusively for the development of manufacture of the item supplied or to be supplied, such as special molds, dies, patterns, jigs and similar special tools and devices. (2) The costs of special tooling will be reimbursed to the contractor by a one-time payment if they are allocable to a single contract or else will be amortized by appropriate instalments by allocation to

12 the items supplied or to be supplied as special manufacturing costs. (3) A record of the amortization of the costs and their allocation to the items supplied or to be supplied will be maintained. 15. Fuels and Energy (1) Fuels and energy include solid, liquid and gaseous fuels, steam, electricity, compressed air and pressurized water. (2) For accounting purposes, fuel and energy costs may be treated in the same way as the costs of factory supplies. 16. Determination of Quantities (1) The quantities entering into the price calculation will be the quantities consumed of each type of material, including the residual materials (scrap or shavings) left over from the normal manufacturing process, or including an addition for defective work. Reusable residual material will be credited to material costs. (2) Where the quantities of materials consumed can be determined from the records, by measuring, etc., the data thus obtained will be used. Otherwise, the quantities of materials consumed will be determined by means of other objective standards, on the basis of samples, etc. (3) For the purposes of forward costing, material quantities will be determined on the basis of drawings, bills of materials, formulations, lists of materials required, etc., while, for historicalcosting purposes, they will be derived from records of materials consumed, etc.

13 Valuation (1) The materials, etc. will be valued at current prices according to paragraph 8 above. Prices according to the first sentence of this subparagraph may be adjusted to reflect cost (see paragraph 18 below). (2) Materials issued from stocks may be valued at accounting prices which will be based on realistic assessments, i.e. for forwardcosting purposes on prices according to paragraph 8 (2) a) above and for historical-costing purposes on prices according to paragraph 8 (2) b) above. These accounting prices will not be changed at short intervals unless prices have changed materially. (3) Standard values or standard rates will be replaced by prices according to paragraph 8 or subparagraph (2) above or converted into such prices. (4) Valuation principles differing from those established by these Rules may be applied subject to contractual agreement unless there are other legal provisions to the contrary. 18. Cost of Goods Purchased (1) The cost of goods purchased will as a rule be based on the price free contractor's plant. It includes the invoice price of the goods purchased and the associated delivery costs such as freight, postage, cartage and packing costs. (2) When purchasing the goods, the contractor will seek to obtain in behalf of the contracting public agency the same favorable terms and conditions as are customarily granted in accordance with normal business practice. (3) Any quantity discounts, trade discounts, credits for loyalty, annual and turnover discounts, for returned packing material, etc. will be

14 recorded and verified and allowance will be made for them in calculating the cost of goods purchased unless, for accounting reasons, they are deducted otherwise in the cost price calculation. 19. Goods Supplied by Contractor-owned Plants (1) Where commercial goods are supplied by contractor-owned plants, the cost of goods purchased will be the current price adjusted for selling expenses saved and customary discounts and allowances. (2) Where non-commercial goods are supplied by contractor-owned plants, the cost of goods purchased will be a) if such transactions are the usual practice of the trade, total cost as determined in accordance with these Rules; b) if such transactions are not the usual practice of the trade, the cost price as determined in accordance with these Rules. 20. Furnished Materials Where materials furnished by the contracting public agency give rise to overhead costs, their value or estimated value will be added to the cost of materials and an equal amount will subsequently be deducted from total cost. 21. Residual Materials (1) Where reusable residual materials can be used in the contractor's plant, they will be valued like materials and credited to material costs. (2) Sold or saleable residual materials will be credited to material costs at average salvage value less any processing and selling expenses incurred.

15 B. Wages, Salaries and Other Labor Costs 22. Allocation (1) Where the job-order costing method according to paragraph 5 (1) b) is used, wages, salaries and imputed entrepreneurial remuneration will be broken down into a) direct labor costs: wages, salaries and entrepreneurial remuneration directly allocable to the product; b) indirect labor costs: wages, salaries and entrepreneurial remuneration not directly allocable to the product. (2) Imputed entrepreneurial remuneration may also be included among imputed costs. (3) In cost accounting according to subparagraphs (1) and (2) above, uniform principles will be consistently applied. 23. Allowability In forward costing and historical costing, only those wages, salaries and other labor costs may be included which, in their nature and amount, do not exceed those which an efficiently operated enterprise would incur (see paragraph 4 above) in the performance of the contract. 24. Valuation (1) In forward costing and historical costing, the wages and salaries established by collective labor agreements or, where these are reasonable, the wages and salaries negotiated with the individual employees will be used.

16 (2) Where the contractor is a sole proprietorship (Br.: sole trader) or partnership, imputed entrepreneurial remuneration may be included in the costs as compensation in lieu of salary for services rendered by sole proprietors or partners. Similarly, imputed remuneration will be allowed as appropriate as compensation in lieu of salary for services rendered by relatives of sole proprietors or partners. (3) Irrespective of the actual withdrawals made by sole proprietors or partners, imputed entrepreneurial remuneration will be the equivalent of the average salary of an employee having similar functions in an enterprise at the same location, in the same trade and of equal importance, or an amount determined by reference to some other objective measure of performance. The size of the enterprise, turnover an the number of partners or relatives of sole proprietors or partners working in the enterprise will be taken into account. 25. Social Costs (1) Social costs will be broken down into a) statutory payments such as employers' contributions to social insurance (disablement insurance, salaried employees' insurance, miners' insurance, health insurance and industrial injuries insurance) and unemployment insurance; b) payments made under collective labor agreements; c) costs of additional benefits. (2) a) Social costs incurred under statute or collective labor agreement are fully allowable. b) The costs of additional benefits are allowable to the extent that they are in accordance with an established policy of the contractor or the usual practice of the trade and conform to the principle of efficiency in operations.

17 C. Maintenance and Repair 26. Allowability (1) Costs incurred for the maintenance and repair of buildings, machinery, fixtures, tools, etc. used in the contractor's operations are allowable. Where such costs are incurred intermittently, they will be amortized in proportion to consumption. (2) Repair costs will be capitalized and distributed over the useful life of the asset by depreciation a) if the repair raises the value of the asset materially above its value at the time of acquisition, or b) if the repair is intended to prolong the life of the asset beyond its original life expectancy (see paragraph 39 (1) below). D. Development, Design and Test Contracts 27. "Independent" and "Contract-sponsored" Development Development and design work, research, testing and the manufacture of experimental items beyond the scope of the contractor's so-called "independent" development will be subject to contractual agreement between the contracting public agency and the contractor ("contractsponsored" development). 28. Verification of Costs (1) All costs incurred for contractor's "independent" development and "contract-sponsored" development and their allocation will be substantiated separately for each type of work. Details will be determined in agreement with the contracting public agency as appropriate.

18 (2) In price calculations, development and design costs will be broken down into costs of "independent" and costs of "contractsponsored" development. E. Production, Startup, Design Modifications 29. Allowability Where additional material and manufacturing costs not normally incurred are incurred in connection with a contract, e.g. for official acceptance tests, overtime work, the start of a novel type of production, the training of new employees or design modifications requested by the contracting public agency, these will be shown as separate items in costing and price calculations. F. Taxes, Fees and Contributions 30. Taxes For the purposes of cost price determination, taxes will be divided into a) taxes that are allowable costs within the meaning of these Rules (determinable taxes) such as trade tax (including profit tax and payroll tax as elements of trade tax), property tax, real estate tax, motor vehicle tax and the tax on internal consumption (section 30 of the Turnover Tax Act). The following taxes will be entered into the price calculation as special costs: aa) turnover tax on goods services supplied or to be supplied by the contractor, including prior-stage taxes and amounts deductible according to sections 15 and 28 of the Turnover Tax (Value-Added Tax) Act. Any turnover tax reliefs granted for the goods or services supplied or to be supplied by the contractor will be deducted.

19 bb) special excise taxes levied on the product. b) taxes that are not allowable costs within the meaning of these Rules (indeterminable taxes), such as income tax, corporate tax, church tax, inheritance tax and gift tax. 31. Equalization-of-Burdens Levies Levies under the Equalization of Burdens Act of 14 August 1952 (BGBl, part I, p. 446) are not allowable costs within the meaning of these Rules. 32. Fees and Contributions (1) Compulsory fees and contributions are allowable costs to the extent that they are related to the contractor's operations. (2) Other than statutory contributions and donations to organizations and corporations are allowable costs within reasonable limits if they are in the interest of the contractor's operations. G. Licenses, Patents and Protection of Industrial Property 33. Allowability and Allocation (1) License fees are allowable costs within the meaning of these Rules if they are in reasonable proportion to the volume of goods or services supplied or to be supplied and their sales prices. Where the contracting public agency so requests, it will be allowed to examine the pertinent license agreements. (2) Expenses incurred for the acquisition of patents will be capitalized and amortized, or allocated on an accrual basis.

20 (3) License fees and charges for the protection of industrial property, and the cost of own and purchased patents will be entered into price calculations as special costs if they relate to specific products or groups of products. H. Rents, Office, Advertising and Transportation Costs, etc. 34. Quantities and Valuation in the determination of other types of costs, in particular rental costs, office costs, advertising and entertainment costs, transportation costs and costs of payments paragraphs 4 and 16 to 21 above apply analogously. J. Special Selling Costs 35. Agent's Commissions (1) An agent's commission or similar compensation is fully allowable only if the services of the agent are required in the preparation, making or performance of the contract and if it keeps within reasonable limits; the contractor's marketing practices will be duly taken into account. In all other cases, an appropriate deduction will be made. (2) A maximum allowable amount may be established by mutual agreement between the contracting public agency and the contractor for agents' commissions and similar compensation. (3) Commissions and similar compensation will be shown as a separate item in price calculations.

21 Terms of Delivery and Delivery Costs The costs of packing material, freight, cartage, transportation insurance, etc. will be stated separately in the price calculation as provided for by the terms of delivery unless they are charged to other in the interest of efficient accounting. K. Imputed Costs a) Depreciation of Fixed Assets 37. Definition (1) Depreciation of fixed assets is a cost arising from the reduction in the value of fixed assets required in the contractor's operations. (2) The depreciation charge may be determined per unit of time or per unit of output (ton, unit, machinehour, etc.). 38. Depreciation Charge and Valuation Method The depreciation charge will be determined independently of the asset values stated in the balance sheet and in tax statements. It is obtained by evenly spreading the cost of acquisition of manufacture of an asset over its useful life. Installation and startup costs are part of the cost of acquisition or manufacture. 39. Useful Life (1) The useful life of an asset may be expressed as the normal life expectancy of this kind of asset or its estimated output over its expected physical life.

22 (2) The estimates of the useful lives of assets or groups of identical assets will be periodically reviewed. Where depreciation charges are found to have been excessive or insufficient, they will be charged or credited, as appropriate, to depreciation contingencies subject to the provisions of paragraphs 49 (3) and 50 below. The contracting public agency and the contractor may agree otherwise. (3) Where the elapsed portion of the useful life of an asset cannot be clearly determined, its estimated residual value (value as new at current prices less past depreciation) may be used as a basic for computing the depreciation charge. 40. Adjustment of Replacement Value (obsolete) 41. Special Depreciation Charges Depreciation charges according to paragraphs 38 to 40 above may be exceeded to make allowance for an unforeseeable technological development or shift in demand or for other reasons (special depreciation charges), provided that the contracting public agency expressly agrees to such higher depreciation charges. Special depreciation charges according to the first sentence of this paragraph will be disclosed separately. 42. Records of Fixed Assets (1) Records of all fixed assets will be maintained containing all data relevant to depreciation, in particular initial values, estimated useful lives, useful life elapsed to date, depreciation charges per unit of time or output and residual values.

23 (2) A separate record will be maintained for each individual asset, provided, however, that identical assets of identical initial value or of low value may be grouped together. b) Interest 43. Allowability (1) Imputed interest may be included in the price calculation for the cost of operating capital. For cost accounting purposes, it will be treated as a separate type of cost. (2) A maximum allowable rate of imputed interest will be established by the Federal Minister of Economics in agreement with the Federal Minister of Finance. (3) The actual costs of borrowed capital (interest, banker s commission, etc.) will not be considered in the price calculation unless they are included in the costs of payments according to paragraph 34 above. (4) Incidental earnings from parts of the operating capital (e.g. interest, rents) will be treated as credits. 44. Determination of Operating Capital (1) Operating capital is operating assets less any interest-free advance payments and deposits received from the contracting public agency and any credits granted free of interest by suppliers under the agreed terms of payment. (2) Operating assets are those fixed and current assets that serve the primary operations of the enterprises. Nonoperating assets will not be taken into consideration. The

24 latter include in particular idle assets except standby equipment necessary to the operations of manufacturing or trading enterprises, agricultural land, houses not occupied by contractor s staff, nonoperating investments, claims for direct or consequential war damages. 45. Valuation of Operating Assets (1) Fixed assets will be included at residual values according to the provisions governing depreciation on the basis of acquisition cost or cost of manufacture (see paragraph 37 ff.). (2) Current assets will be valued on the basis of acquisition cost or cost of manufacture. (3) Unusable or depreciated materials or semifinished or finished goods will be deducted from current assets or included at reasonable residual values. (4) Foreign currency securities and accounts will be valued at the current exchange rates at the reference dates for which the operating assets are determined. (5) The rest of the current assets will be included at their current values at the reference date. (6) In determining operating capital, provisions for reductions in assets values will be deducted from the gross book value of the assets unless subparagraphs (1) to (5) above provide otherwise.

25 Volume of Operating Assets In determining operating assets and operating capital, the average volumes during the accounting period will be used. c) Individual Risks 47. Definition (1) A risk is a danger of loss resulting from the nature of the enterprise and its operations. (2) Risks affecting the enterprise as a whole and resulting from the nature of the enterprise, the specific conditions in the trade or business activity in general constitute the general entrepreneurial risk. (3) Individual risks are dangers of loss related to the various activities of the enterprises in the performance of the contract. 48. Allocation (1) The general entrepreneurial risk is covered by the contractor s fee. (2) To cover individual risks, contingencies may be included in the costs. Risks not related to the operations of the enterprise are unallowable. Where risks are covered by insurance or losses incurred have been charged to other cost items, contingencies are unallowable.

26 Determination of Contingencies (1) Contingencies will be determined on the basis of losses that have actually arisen from risks in the past. These losses will be set off against contingencies that did not materialize. The actual risks in the current accounting period will be taken into account. Where no reliable historical data are available, contingencies will be carefully estimated. (2) In determining contingencies, a sufficiently long period, possibly covering several years, will be used as a reference basis. Desirably, contingencies should be adjusted to match actual losses arising from risks. (3) Contingencies will be determined and adjusted separately for each type of risk and group of products or services. (4) Small and medium-sized enterprises may, in the interest of efficient accounting, use a simplified method of determining and allocating contingencies. Medium-sized enterprises will break down contingencies at least by group of products or services. 50. Verification (1) Records substantiating losses arising from risks, contingencies that did not materialize and the allocation of contingencies will be maintained and reconciled with the books of account. (2) Where the contracting public agency and the contractor so agree, the allowablility of individual contingencies may be made subject to their verification by the contractor.

27 L. Contractor s Fee 51. Definition The contractor s fee includes a) compensation for the general entrepreneurial risk; b) an incentive fee to be granted if the contractor s economic, technical or organizational performance has been outstanding. The incentive fee will be in proportion to the contractor s additional performance. 52. Allowability (1) Compensation for the general entrepreneurial risk will be a percentage of operating assets or a percentage of turnover or the sum of two such percentages or a fixed amount. The Federal Minister of Economics may establish standard or maximum rates or amounts. (2) An incentive fee is allowable only where it has been negotiated between the contracting public agency and the contractor. (3) The contractor s fee will be allocated to the products and services either directly or by applying some simple formula.