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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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: _______
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