[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.205-17]

[Page 596]
 
            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]