Section 3-123-14 - Material costs(a) Material costs are allowable, subject to subsections (b) and (c). Material costs are the costs of all supplies, including raw materials, parts, and components (whether acquired by purchase from an outside source or acquired by transfer from any division, subsidiary, or affiliate under the common control of the contractor), which are acquired in order to perform the contract. In determining material costs, consideration shall be given to appropriate spoilage, appropriate inventory losses, and appropriate overages.(b) Material costs shall include adjustments for all available discounts, refunds, rebates, and allowances which the contractor may take under the circumstances, and for credits for proceeds the contractor received or may receive from salvage and material returned to suppliers.(c) Allowance for all materials transferred from any division including the division performing the contract, subsidiary, or affiliate under the common control of the contractor shall be made on the basis of costs incurred by the transferrer, except the transfer may be made at the established price provided that the price of materials is not determined to be unreasonable by the procurement officer, the price is not higher than the transferrer's current sales price to its most favored customer for a like quantity under similar payment and delivery conditions, and the price is established either: (1) By the established catalogue price; or(2) By the lowest price obtained as a result of competitive procurements conducted with other businesses that normally produce the item in similar quantities.[Eff 12/15/95; am and comp 11/17/97; am and comp 11/15/01; am and comp 11/25/02] (Auth: HRS § 103D-601) (Imp: HRS § 103D-601)