The costs associated with agency aircraft programs must be accumulated to: (1) justify the use of government aircraft in lieu of commercially available aircraft, and the use of one government aircraft in lieu of another; (2) recover the costs of operating government aircraft when appropriate; (3) determine the cost effectiveness of various aspects of agency aircraft programs; and (4) conduct the cost comparisons required by OMB Circular No. A-76 to justify in-house operation of government aircraft versus procurement of commercially available aircraft services. To accomplish these purposes, agencies must accumulate their aircraft program costs into the Standard Aircraft Program Cost Elements defined in Attachment B. The remainder of this Attachment presents guidance for accomplishing each of these purposes.
Justify Use of Aircraft
The cost comparison to justify the use of a government aircraft for a proposed trip under Section 8.a.(ii) of this Circular should be made prior to authorizing the use of the aircraft for that trip. Agencies that propose to use their aircraft to support recurring travel between locations are encouraged to develop standard trip cost justification schedules. These schedules would summarize the projected costs of using one or more specific types of agency aircraft to travel between selected locations as compared to using commercial aircraft (including charter) or airline service between those locations. Comparative costs for varying passenger loads would also be shown. Agencies that chose to use this approach would be able to see at a glance the minimum number of official travelers needed to justify the use of a particular aircraft or aircraft type for a trip between locations on the schedule. Agencies that are not able to use such schedules are required to do a cost justification on a case by case basis.
To make the cost comparisons necessary to justify the use of a government aircraft, the agency must compare the actual cost of using a government aircraft to the cost of using a commercial aircraft (including charter) or airline service. The actual cost of using a government aircraft is either: (a) the amount that the agency will be charged by the organization that provides the aircraft, (b), if the agency operates its own aircraft, the variable cost of using the aircraft; or (c), if the agency is not charged for the use of an aircraft owned by another agency, the variable cost of using the aircraft as reported to it by the owning agency.
Agencies should develop a variable cost rate for each aircraft or aircraft type (i.e., make and model) in their inventories before the beginning of each fiscal year. These rates should be developed as follows:
To compute the variable cost of using an agency's own aircraft for a proposed trip, multiply the variable cost rate computed in Step 3 (above) by the estimated number of flying hours for the trip. The number of flying hours should include all time required to position the aircraft to begin the trip and to return the aircraft to its normal base of operations, if no follow-on trip is scheduled. If a follow-on trip requires any reposition-ing time, it should be charged with that time. If one aircraft mission (i.e., a series of flights scheduled sequentially) supports multiple trips, the use of the aircraft for the total mission may be justified by comparing the actual cost of the entire mission to the commercial aircraft (including charter) or airline costs for all the component trips.
The cost of using commercial airline or aircraft services for the purpose of justifying the use of government aircraft must:
Recover Cost of Operation
Under the Economy Act of 1932, as amended, (31 U.S.C.S. 1535), and various acts appropriating funds or establishing working funds to operate aircraft, agencies are required to recover the costs of operating their aircraft for use by other agencies, other governments (e.g., state, local, or foreign), or non-official travelers. Depending on the statutory authorities under which its aircraft were obtained or are operated, an agency may use either of two methods for establishing the rates charged for using its aircraft: (1) the full cost recovery rate or (2), the variable cost recovery rate.
The full cost recovery rate for an aircraft is the sum of the variable and fixed cost rates for that aircraft. The computation of the variable cost rate for an aircraft or aircraft type is described under the previous paragraph "Justify Use of Aircraft." The fixed cost rate for an aircraft or aircraft type is computed as follows:
The variable cost recovery rate for an aircraft or aircraft type is the same as the variable cost or usage rate described under the previous paragraph "Justify Use of Aircraft." If an agency decides to base the charge for using its aircraft solely on this rate, it must recover the fixed costs of those aircraft separately from the appropriation which supports the mission for which the procurement of the aircraft was justified. In such cases, the fixed cost recovery rate may be expressed on an annual, monthly or flying hour basis.
Determine Aircraft Program Cost Effectiveness
Although cost data are not the only measures of the effectiveness of an agency's aircraft program, they can be very useful in identifying opportunities to reduce aircraft operational costs. These opportunities might include changing maintenance practices, purchasing fuel at lower costs, and the replacement of old, inefficient aircraft with aircraft that are more fuel efficient and have lower operations and maintenance costs.
The most common measures used to evaluate the cost effectiveness of various aspects of an aircraft program are expressed as the cost per flying hour or per passenger mile for certain types of aircraft costs. These measures may be developed using the Standard Aircraft Cost Elements and include, but are not limited to: maintenance costs/flying hour, fuel and other fluids cost/flying hour, accident repair costs/flying hour (or per aircraft), and variable cost/passenger mile.
The Administrator of General Services should coordinate the development of specific cost effectiveness measures with an interagency aircraft policy working group.
Justify In-House Operation
OMB Circular No. A-76, "Performance of Commercial Activities," requires Federal agencies to conduct cost comparisons of commercial activities they operate and, where appropriate, to determine the most economical way to perform the work -- whether by private commercial source or using in-house government resources. The guidelines for conducting these cost comparisons are presented in the Supplement to the Circular.
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