D.C. Mun. Regs. r. 27-3320

Current through Register Vol. 71, No. 24, June 14, 2024

Rule 27-3320 - AUTOMATIC DATA PROCESSING EQUIPMENT LEASING COSTS

3320.1

The provisions of this section shall apply to all contractor-leased automatic data processing (ADP) equipment procured under operating leases, except as components of an end item to be delivered to the District.

3320.2

The costs of leasing ADP equipment shall be allowable only to the extent that the contractor can demonstrate that the costs meet the following criteria:

(a) The costs are reasonable and necessary for the conduct of the contractor's business in light of factors such as the contractor's requirements for ADP equipment, costs of comparable facilities, the various types of leases available, and the terms of the lease agreement;

(b) The costs do not give rise to a material equity in the equipment, such as an option to renew or purchase at a bargain lease rate or price other than that normally given to industry at large, but represent charges only for the current use of the equipment, including incidental service costs such as maintenance, insurance, and applicable taxes; and

(c) The contracting officer's approval is obtained for the leasing arrangement when the total costs of leasing the ADP equipment is to be allocated to one (1) or more District contracts which require negotiating or determining costs, or the ADP equipment in a single plant or division exceeds five hundred thousand dollars ($500,000) a year, and fifty percent (50%) or more of the total cost is allocated to one (1) or more District contracts which require negotiating or determining costs.

3320.3

If the contractor leases ADP equipment but cannot demonstrate, on the basis of facts existing at the time of the decision to lease or continue leasing and documented in accordance with this section, that leasing will result in less cost to the District over the anticipated useful life of the equipment, then leasing costs shall be allowable only up to the amount that would be allowed if the contractor purchased the equipment.

3320.4

Lease costs under a sale and leaseback arrangement shall be allowable only up to the amount that would have been allowed if the contractor retained title to the ADP equipment.

3320.5

Allowable leasing costs of ADP equipment leased from any division, subsidiary, or organization under a common control shall be limited to the cost of ownership excluding interest or other costs which are not allowable under this chapter.

3320.6

When there is an established practice of leasing the same or similar ADP equipment to unaffiliated lessees, leasing costs shall be allowable in accordance with §§ 3320.2, 3320.7, 3320.8 and 3320.9, except that the purchase price and costs of ownership shall be determined in accordance with the provisions of § 3324.

3320.7

The contractor's estimate of the anticipated useful life of the ADP equipment may represent the application life (utility in a given function), technological life (utility before becoming obsolete in whole or in part), or physical life (utility before wearing out), depending upon the facts, circumstances, and the particular facilities involved.

3320.8

In estimating anticipated useful life, the contractor may use the application life if it can be demonstrated the ADP equipment has utility only in a given function and the duration of the function can be determined.

3320.9

The contractor may use the technological life to determine anticipated useful life if it can demonstrate that existing ADP equipment must be replaced because of one (1) or more of the following reasons:

(a) Specific program objectives or contract requirements cannot be accomplished with existing ADP equipment;

(b) Cost reductions will produce identifiable savings in production or overhead costs;

(c) Increase in workload volume cannot be accomplished efficiently by modifying or augmenting existing ADP equipment; or

(d) A consistent pattern of capacity operation, including multiple shifts, exists on existing ADP equipment.

3320.10

In estimating the lease cost to the District for the anticipated useful life of the ADP equipment, the contracting officer shall compare the cumulative costs that would be allowed if the contractor owned the ADP equipment with cumulative costs that would be allowed under any of the various types of leasing arrangements available. For the purposes of this comparison, the costs of ADP equipment shall exclude interest or other unallowable costs.

3320.11

The contractor's justification of a leasing decision, when required by the contracting officer, shall consist of the following data:

(a) Analysis of use of existing ADP equipment;

(b) The application of the criteria to allow cost of leasing ADP equipment as specified in this chapter;

(c) Specific objectives or requirements, generally in the form of a data system study and specification;

(d) Solicitation of proposals, based on the data system specifications, from qualified sources; and

(e) Proposals received in response to the solicitation, the reasons for selecting the equipment chosen, and the basis of the decision to lease.

D.C. Mun. Regs. r. 27-3320

Final Rulemaking published at 35 DCR 1659 (February 26, 1988)