Idle Facilities and Idle Capacity Costs - FAR 31.205-17

Allowable or Unallowable: Unallowable, Allowable

Source: FAR

Idle Facilities and Idle Capacity Costs

Unallowable unless certain conditions are met. See Overview below.

(a) Definitions

As used in this subsection—

Costs of Idle Facilities or Idle Capacity

Facilities

Idle Capacity

Idle Facilities

Overview

(b) The costs of idle facilities are unallowable unless the facilities—

(1) Are necessary to meet fluctuations in workload; or

(2) Were necessary when acquired and are now idle because of changes in requirements, production economies, reorganization, termination, or other causes which could not have been reasonably foreseen. (Costs of idle facilities are allowable for a reasonable period, ordinarily not to exceed 1 year, depending upon the initiative taken to use, lease, or dispose of the idle facilities (but see 31.205-42 - Termination Costs)).

(c) Costs of idle capacity are costs of doing business and are a factor in the normal fluctuations of usage or overhead rates from period to period. Such costs are allowable provided the capacity is necessary or was originally reasonable and is not subject to reduction or elimination by subletting, renting, or sale, in accordance with sound business, economics, or security practices. Widespread idle capacity throughout an entire plant or among a group of assets having substantially the same function may be idle facilities.

(d) Any costs to be paid directly by the Government for idle facilities or idle capacity reserved for defense mobilization production shall be the subject of a separate agreement.