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APPENDIX 6
Aviation Competitions
A. General
1. This Appendix provides guidance for use in cost comparisons
involving the provision of aircraft or aviation management support services. It
has been prepared to ease completion of cost comparisons conducted in
accordance with OMB Circular A-76 and OMB Circular A-126, "Improving the
Management and Use of Government Aircraft," dated May 22, 1992.
2. In accordance with OMB Circular A-126, agencies should conduct
approved cost comparisons before retaining, purchasing or otherwise providing
Federal aircraft or aviation services not otherwise exempt from Circular A-76
(see Part I). In reviewing aviation programs, agencies should consider that
although an activity or mission may be inherently governmental, the tools
needed to perform the activity are not necessarily inherently governmental.
Related aviation support services should be reviewed, in accordance with this
Supplement, for possible conversion to or from in-house, contract or
interservice support aggreement (ISSA) performance. Leases for aircraft of 90
days or more are subject to these principles and procedures.
3. Agencies may estimate lease, charter, or other contract aviation
support costs through the General Services Administration's (GSA) Federal
Aviation Management Information System (FAMIS) or other pre-approved data
sources. This approach avoids the need for formal solicitations to acquire
commercial bids for comparison with an in-house Government cost estimate. Other
aspects of the process described in this Supplement are maintained.
4. When an aviation cost comparison is conducted, the agency will
notify affected Federal employees and announce the tentative cost comparison
decision in the Commerce Business Daily. The announcement will initiate the
A-76 Administrative Appeal process. The Performance Requirements Summary, the
Management Plan, including the calculation of commercial costs, and the
aviation cost comparison form will be made available to the public upon
request.
5. Appeals of tentative aviation cost comparison decisions will be
directed to the agency's A-76 Administrative Appeal Authority, who will conduct
the appeal as provided in Part I and Part II of this Supplement.
6. These instructions incorporate the cost element definitions used
elsewhere in Parts I and II of this Supplement. In addition, there are several
cost definitions that pertain to only aircraft and aviation services as
provided by this Appendix.
7. Agencies will provide copies of each aircraft or aviation cost
comparison to the GSA Office of Aircraft Management Division, when completed,
and to the Office of Management and Budget (OMB) upon request or as required by
OMB Circular A-11 to justify aircraft purchases.
B. Policy
1. Agencies should rely on commercial airline or other aviation
services to meet their aviation mission and transportation support needs.
2. In general, the operations of aircraft and aviation services are
commercial in nature and are not inherently governmental. Certain Government
officials or missions may require enhanced levels of security, both on the
ground and in the air. In most cases, however, the aviation industry can
accommodate the Government's need for services and for on-board security
devices, special flight profiles, testing equipment, etc.
3. The number of aircraft owned or leased by an agency may not
exceed the number necessary to carry out direct mission requirements and, then,
only where commercial operations are not as cost effective or are not
available, as demonstrated by the procedures of this Supplement.
4. The size and capacity of agency aircraft acquired or leased
should not exceed that necessary to cost-effectively meet mission requirements,
including the crew and equipment for the mission flight profiles.
C. The Aviation Management Plan
1. The Management Plan for aircraft or aviation support services
should conform to the principles and procedures in Part I of this Supplement.
The Management Plan is structured to identify the lowest overall cost to the
taxpayer and to fully consider Government Owned Contractor Operated (GOCO)
options.
2. A Performance Work Statement (PWS) or a Performance Requirements
Summary (PRS) is a part of the Management Plan. It should define the scope of
services, workload data and performance criteria needed to meet agency mission
requirements. It may not describe a specific kind or make or model of aircraft.
3. Agencies should determine if equipment and/or personnel can be
fitted to a contract or charter/rental aircraft agreement that results in a
lower total service cost to the Government. Equipment requirements include, but
are not limited to, aircraft, unique navigation, secure communication, and
flight test devices.
4. GSA FAMIS data assume that the contractor will provide all
related equipment, including aircraft. Agencies that wish to use these aircraft
cost comparison procedures, under a GOCO arrangement, may need to solicit
adjusted rate schedules from a variety of sources. If acceptable information
sources are not available, a formal competition with commercial and/or ISSA
sources may be necessary.
5. If the scope of the competition includes non-aviation support
(ground support activities), the cost of such in-house, contract or ISSA
support is calculated as provided in Part II of this Supplement.
D. The cost of government performance
All labor, material and fuel costs are estimated and escalated as
provided in Part II of this Supplement.
E. Standard aviation operation cost elements--variable
The variable costs of operating aircraft are those costs that vary
depending on how much the aircraft are used. The specific variable cost
elements include:
1. Fuel and other fluids. These are the costs of aviation gasoline,
jet fuel, and other fluids, e.g., engine oil, hydraulic fluids, and
water-methanol, consumed by aircraft. Fuel costs are the cost per gallon times
gallons per hour. Engine oil and other lubricants can be estimated using
manufacturers' estimates or on the basis of an historic percentage of engine
fuel cost per hour.
2. Crew. The crew costs that vary according to aircraft usage
consist of travel expenses, particularly reimbursement of subsistence, i.e.,
per diem and miscellaneous expenses, overtime charges, and wages plus benefits
of crew members hired on an hourly or part-time basis.
3. Aircraft lease or rental. When aircraft are obtained under an
open-ended arrangement, such as an on-call (hourly/availability rate) basis,
the associated lease or rental costs are considered variable costs.
4. Landing and tie down fees (if applicable). Landing and tie down
fees that are not common costs and are associated with aircraft usage are
considered variable costs. Tie down fees for storing an aircraft at its base of
operations should be considered a fixed cost. Include the historic fees paid or
assessed per landing, times landings, divided by projected flight hours.
5. Variable maintenance and spares.
All maintenance activities and parts costs based on aircraft use are
variable costs. All non-scheduled maintenance and all non-scheduled maintenance
inspections are also variable costs. Maintenance and inspection activities
scheduled on a calendar interval basis will be considered fixed. In addition to
the costs of normal maintenance activities, variable maintenance costs include
aircraft refurbishment, such as painting and interior restoration, and costs of
or allowances for performing overhauls and modifications required by service
bulletins and airworthiness directives.
a. Maintenance labor. All labor expended by mechanics, exclusive of
the overhaul or major repair of components and engines.
b. Maintenance parts. This includes materials and parts consumed in
aircraft maintenance and inspections, exclusive of materials and parts for
engine overhaul, aircraft refurbishment, and/or repair of major components.
Typical items in this category are tires, instruments, avionics, generators,
relays, pumps, brakes, filters, airframe hardware, windows, interiors, paint,
shafting, and bearings not inside components covered under an overhaul.
c. Maintenance contracts. This includes all contracted costs for
unscheduled maintenance and for maintenance scheduled on a flying hour basis or
based on the condition of the part or component.
d. Engine overhaul, aircraft refurbishment, and major component
repairs. These are the materials and labor costs of overhauling engines,
refurbishing aircraft, and/or repairing major aircraft components.
e. Reserves. This is for overhauling components of engines, and
other major work including painting, refurbishment of the aircraft interior,
and expenses not recognized in other maintenance accounts.
f. Add lines 5a through 5e and enter on line 5f for the total cost
of direct variable maintenance and spares.
6. Add lines 1 through 4 and 5f to find the total direct operations
cost per flight hour.
7. Enter the annual number of flight hours from the PWS/PRS.
8. Multiply the total direct operating cost per flight hour (line 6)
by the number of flight hours (line 7) to find the total direct operating cost.
F. Standard aviation operation cost elements--fixed
The fixed costs of operating aircraft are those that result from
owning and supporting the aircraft and do not vary according to aircraft usage.
9. Crew. Federal pilots/crew are often paid whether or not the
aircraft are flown. These fixed crew costs include the salaries, benefits, and
training costs of crew members who perform minimal aircraft maintenance or
other administrative tasks that could be impacted by a conversion to contract
performance. Also included in fixed crew costs are the costs of their charts,
personal protective equipment, uniforms, and other personal equipment when the
agency is authorized to purchase such items. Non-aviation activities performed
by pilots/crew that would continue even if operations were converted to
contract should not be included.
10. Fixed maintenance.
Maintenance and inspection activities are scheduled on a calendar
interval basis and take place regardless of whether or how much the aircraft
are flown. These are fixed costs, including labor and material.
a. Maintenance labor. This includes all projected labor expended by
mechanics, technicians, and inspectors associated with maintenance scheduled on
a calendar interval basis. This category also includes costs associated with
non-allocated maintenance labor expenses; i.e., associated salaries, benefits,
travel expenses, and training costs. These costs should be evenly allocated
over the number of aircraft in the fleet.
b. Maintenance parts. This includes all parts and consumables used
for maintenance scheduled on a calendar interval basis.
c. Maintenance contracts. This includes all contracted costs for
maintenance or inspections scheduled on a calendar interval basis.
11. Aircraft lease. When aircraft are leased for 90 days or more,
with a known fee, utilization rate or minimum reimbursement guarantee, the
associated lease costs are considered fixed. Include the entire amount paid.
12. Depreciation.
As provided in Part II of this Supplement, aircraft and other major
asset (hangar) depreciation costs are added to each option year. Aircraft have
finite economic or useful service lives. Depreciation is the method used to
spread the acquisition cost, less residual value, over an asset's useful life.
Although these costs are not direct outlays as is the case with most other
costs, it is important to recognize them for analysis. Subtract the residual
(not market) value from the total of the acquisition cost plus any capital
improvements and, then, divide by the remaining estimated useful life of the
asset--not less than the cost comparison period.
a. The acquisition cost is the value initially recorded on agency
property/accounting records at the time of acquisition. If the aircraft is
acquired through an interagency transfer, the acquisition cost is the greater
of the aircraft net book value plus the cost of returning the aircraft to an
airworthy, mission ready condition or the commercial retail value of that
aircraft in average condition, as established by the Aircraft Bluebook Price
Digest or other industry standard. If it is a military aircraft without a
direct commercial equivalent, the acquisition cost is equal to the most
comparable commercial equivalent plus the cost of returning the aircraft to an
airworthy, mission ready condition. The following explains the relevant terms:
b. Useful life. Useful life is the estimated period during which
the aircraft will be used. If a new aircraft has an airframe with a design life
of 10,000 hours and the agency expects to fly the aircraft 500 hours per year,
the useful life is twenty years.
c. Residual value. Residual value reflects the historically
expected condition of the asset at the end of its useful life. It is the dollar
value below which the asset will not be depreciated. Residual value is
established at the time of acquisition. Agencies will select the lessor of the
following methods to calculate the residual value of aircraft:
(1) Assume a 10 percent residual value for purposes of calculating
the depreciable value of the aircraft and annual depreciation expenses.
(2) Select the average of the historic resale value of similar
aircraft by age and type, as provided by GSA.
d. Reconstructions, conversions, refurbishment, and certification
of ex-military aircraft. These maintenance efforts add value or prolong the
life of aircraft. They are capital improvements that add to the Net Book Value
of the asset (acquisition cost less accumulated depreciation). This revised
total value should then be depreciated over the remaining or extended useful
life of the asset.
e. Fully depreciated assets. If an asset has been fully depreciated
or has exceeded its expected useful life, recalculate the depreciation schedule
through the end of the cost comparison period.
13. Self insurance costs.
Aviation activity involves risks, potential casualty losses and
liability claims. These risks are covered in the commercial sector by
purchasing insurance, the costs for which are captured within the GSA FAMIS
system. Actual or historic agency costs are not comparable with the costs
included in the commercial bid (FAMIS) or representative of the overall cost to
the Government as a whole.
a. Agencies should calculate annual in-house hull aircraft casualty
insurance costs by multiplying the "Blue Book" or market value of the aircraft
by the insurance factors provided annually by the General Services
Administration's Aircraft Management Division. Enter these cost estimates on
line 13a.
b. Agencies should calculate annual Federal aircraft liability
insurance costs on the basis of the number of aircraft seats the agency has or
will install, including pilots, over the course of the cost comparison period.
Enter the aircraft liability cost developed using data provided annually by the
General Services Administration's Aircraft Management Division on line 13b.
c. All other insurance costs incurred in the performance of the
aviation service under study are calculated in accordance with Part II and
entered on Line 13a or 13b, as appropriate.
d. Enter the total for all insurance (sum of lines 13a through 13c)
on Line 13d.
14. Overhead. This includes all costs associated with operational
and administrative overhead. As described in Part II of this Supplement,
aviation management overhead costs shall be calculated by applying the standard
overhead cost factor of 12 percent to the total of lines 2, 5.a, 9 and 10.a of
the Aircraft and Aviation Cost comparison Form. Enter the total of this
calculation on Line 14.
15. Cost of capital or finance expense.
a. The cost of capital is the annual cost to the Government of
acquiring the funds necessary for capital investments. The cost of capital is
applied to the outstanding balance of the aircraft purchase price for each year
of the performance period.
b. The annual cost of capital is included for any depreciable asset
acquired less than two years prior to or after the cost comparison that will be
used as a part of the MEO. The cost of capital is only applicable to assets
required by the MEO that will not be provided (GOCO) to the commercial source.
c. The cost of capital is calculated by applying OMB Circular A-94
"Discount Rates to be Used in Evaluating Deferred Costs and Benefits," plus any
capital improvements.
d. If the purchase price is unknown, as in the case of a forfeited
asset or interagency transfer, the acquisition cost is the greater of the
aircraft net book value plus the cost of returning the aircraft to an
airworthy, mission ready condition or the commercial retail value of that
aircraft in average condition, as established by the Aircraft Bluebook Price
Digest or other industry standard. If it is a military aircraft without a
direct commercial equivalent, the acquisition cost is equal to the most
comparable commercial equivalent plus the cost of returning the aircraft to an
airworthy, mission ready condition.
e. Aircraft acquired through lease/purchase arrangements are not be
burdened with the cost of capital. The cost of capital is assumed to exist in
the lease/purchase agreement. At the transfer of title, depreciation expenses,
calculated from the then existent market price of the aircraft, will be
incurred.
16. Total fixed operating costs. Add lines 9 through 15 and enter on
line 16.
17. Total in-house MEO performance costs. Add lines 8 and 16 and
enter on line 17.
G. Standard aviation operation cost elements--developing the cost
of contract performance
18. Contract cost.
a. The comparable cost of contract performance is to be calculated
on the Aviation CCF.
b. The most efficient commercial cost of meeting the service
requirement is to be entered if a solicitation was issued requesting formal
bids. If GSA/FAMIS data is being used to estimate contract costs, this figure
is established by reviewing existing contracts and rental/charter flight rate
information provided by FAMIS or from other GSA approved sources.
c. Enter the estimated trip costs times the number of
trips/missions or the hourly rate for that aircraft times the number of
estimated flight hours from the PWS/PRS on line 19. If FAMIS does not reflect
the aircraft services requirements, and reasonably accurate costs cannot be
constructed by extrapolation from the FAMIS database, agencies may utilize
other approved data sources.
19. Cost construction to meet PWS/PRS.
There may be other adjustments necessary to estimate the cost of
contract performance using GSA/FAMIS data. The following are other costs that
may be considered and entered--to the extent that they are not common costs or
costs included in the published/developed rates. All such costs will be fully
justified and made available for public review.
a. Daily Availability/Standby/Guarantee Hours.
b. Additional Pilot and Crew Charges.
c. Additional Maintenance Support.
d. Airframe Alteration/Equipment Installation.
e. Equipment Not Provided by the Government.
f. Additional Ground Service Support.
g. Travel and Per Diem.
h. Service Equipment Mileage.
i. Airport Fees.
j. Other.
20. Contract administration. There will be costs that the agency
incurs in administering the contract. These costs are relevant only if they
differ between in-house and contract alternatives. Agencies should refer to
Part II, Chapter 3, Table 3-1 for guidance.
21. One-time conversion costs. See Part II, Chapter 3 of this
Supplement.
22. Gain from disposal/transfer of assets. See Part II Chapter 3 of
this Supplement.
23. Federal income tax. Multiply line 19 as provided in Appendix 5
and enter as a savings/revenue to the Government caused by the conversion to
contract performance.
24. Total estimated cost of contract performance. This element
reflects the total of lines 18 through 24.
H. Aviation cost comparison of in-house versus contractor or ISSA
performance.
25. In-house performance costs. Data is taken from Line 17--for each
year of performance as established in the PRS, but not less than three years.
26. Contract or ISSA performance. Data is taken from line 24--for
each year of performance.
27. Conversion differential. As provided in Part II of this
Supplement, a conversion differential equal to the lesser of; (1) 10 percent of
the in- house personnel related costs (total of Lines 2, 5.a, 9 and 10.a.) or
(2) $10 million over the performance period, is added to the total cost of
current method of performance. Enter the result of this calculation on Line 27.
28. Adjusted total cost of in-house performance. If the cost
comparison is being conducted to determine if an aircraft or aviation service
should be converted from contract or ISSA performance to in-house operation,
the conversion differential as calculated above (Line 27) is added to the
In-house performance cost estimate (Line 25, Total Column only) and the sum is
entered under Adjusted Total Cost of In-House Performance (Line 28). The amount
in the Total Column for Line 26 is replicated on Line 29.
29. Adjusted total cost of contract performance. If the cost
comparison is being conducted to determine if an aircraft or aviation service
should be converted from in-house operation to contract or ISSA performance,
the conversion differential as calculated above (Line 27) is added to the
Contract performance cost estimate (Line 26, Total Column only) and the sum is
entered under Adjusted Total Cost of Contract Performance(Line 29). The amount
in the Total Column for Line 25 is replicated on Line 28.
30. Decision. Subtract Line 28 from Line 29 and enter the result on
Line 30. A positive amount on Line 30 supports a decision to perform the
aircraft and aviation support activity with in-house resources. A negative
amount on Line 30 supports a decision to accomplish the work with contract
resources.
31. Cost comparison decision.
Indicate in the appropriate block on line 31 the decision supported
by line 30.
a. If the result of the comparison is a decision to accomplish the
work with contract resource and that decision is affirmed after adjustments by
the public review, the agency will:
(1) Expand the Performance Requirements Summary developed under the
aviation methodology to meet the requirements of a Performance Work Statement.
(2) Issue a formal solicitation for bids from the commercial sector
and convert to contract.
b. If the decision of the aviation cost comparison is to accomplish
the work with in-house resources, and that decision is affirmed after
adjustments by the public review, the agency will announce the final decision
in the Commerce Business Daily. The results will be recorded in the OMB
Circular A-76 tracking system.
THE A-76 AIRCRAFT AND AVIATION COST COMPARISON FORM
DIRECT OPERATION COST PER FLIGHT HOUR (PFH)
1. Fuel and and Other Fluids $_____
2. Crew (PFH) _____
3. Aircraft Lease or Rental _____
4. Landing and Tie-Down Fees (If applicable) _____
5. Variable Maintenance and Spares
a. Maintenance Labor @ $___ per hour
multiplied by ___ man-hours PFH ____
b. Maintenance Parts ____
c. Maintenance Contracts ____
d. Engine over-haul, etc. ____
e. Reserves ____
f. Total variable maintenance cost _____
6. Total Direct Operating Cost Per Flight Hour _____
7. Flight Hours for PWS. _____
8. TOTAL DIRECT OPERATING COST (line 6 x line 7) $_____
FIXED OPERATING ANNUAL COST
9. Crew _____
10. Fixed Maintenance
a. Maintenance Labor _____
b. Maintenance Parts _____
c. Maintenance Contracts _____
11. Aircraft Lease _____
12. Depreciation _____
13. Self Insurance
a. Hull _____
b. Liability _____
c. Other
c1. Casualty _____
c2. Personnel Liability _____
d. Total Self-Insurance _____
14. Overhead _____
15. Cost of Capital or Finance expense _____
16. TOTAL FIXED OPERATING ANNUAL COST (Lines 9 thru 15)$_____
17. TOTAL IN-HOUSE PERFORMANCE COST (Lines 8 + 16) $_____
CONTRACT AVIATION OPERATIONS COST WORKSHEET
18. Contract (PFH times number of hours) $_____
19. Cost construction to meet PWS
a. Daily availability/guarantee hours _____
b. Additional pilot and crew charges _____
c. Additional maintenance support _____
d. Airframe alteration/equipment
installation _____
e. Equipment not provided by Government _____
f. Additional ground service support _____
g. Travel and per diem _____
h. Service equipment mileage _____
i. Airport fees _____
j. Other _____
20. Contract Administration _____
21. One-time Conversion _____
22. Gain on Disposal/Transfer of Assets (deduct) (_____)
23. Federal income tax (deduct) (_____)
24. TOTAL CONTRACT PERFORMANCE COST $_____
----------------------------------------------------------------
IN-HOUSE VERSUS CONTRACT PERFORMANCE
Performance periods
1st 2nd 3rd Add'l TOTAL
25. In-house performance $______ $______ $______ $______ $______
26. Contract performance $______ $______ $______ $______ $______
27. Conversion Differential $______
28. Adjusted Total Cost of In-House Performance $______
29. Adjusted Total Cost of Contract Performance $______
30. Decision - Line 29 minus Line 28: $______
31. COST COMPARISON DECISION: Accomplish Work
In-house (+) $______
Contract (-) $______
32. In-House MEO Certified By:__________________________
Date: _______
__________________________
Office and Title
"I certify that, to the best of my knowledge and
belief, the in-house organization reflected in this
cost comparison is the most efficient and cost
effective organization that is fully capable of
performing the scope of work and tasks of the PWS/PRS.
I further certify that I have obtained from the
appropriate authority concurrence that the
organizational structure, as proposed, can and will be
fully implemented - subject to this cost comparison, in
accordance with all applicable Federal regulations.
33. In-House Cost Estimate Prepared By:_________________
Date: ________
34. Independent Reviewer: _________________________
Date: ________
_________________________
Office and Title
"I certify that I have reviewed the PWS/PRS, Management
Plan, In-house and GSA/FAMIS cost estimates and
supporting documentation available prior to bid opening
and to the best of my knowledge and ability have
determined that: (1) the ability of the in-house MEO to
perform the work contained in the PWS/PRS at the
estimated costs included in this cost comparison is
reasonably established, (2) that the selection and
inclusion of contract performance costs are reasonable
and, (3) that all costs entered on the cost comparison
have been prepared in accordance with the principles
and procedures of Circular A-76 and its Supplement.
35. Cost Comparison Completed By: ________________
Date: ________
36. Contracting Officer: ________________
Date: ________
37. Tentative Cost Comparison
Decision Announced By: ________________
Date: ________
38. Appeal Authority (if applicable): ________________
Date: _______
