99-o0014

OFFICE OF THE UNDER SECRETARY OF DEFENSE

3000 DEFENSE PENTAGON

WASHINGTON, DC 20301-3000

November 16, 1999

ACQUISITION AND

TECHNOLOGY

DP (DAR)

In reply refer to DAR Tracking Number: 99-O00l4

MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,ASN (RD&A) /ABM

DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE (CONTRACTING), SAF/AQC

DEPUTY ASSISTANT SECRETARY OF THE ARMY (PROCUREMENT)

COMMANDER, DEFENSE CONTRACT MANAGEMENT COMMAND, DEFENSE LOGISTICS AGENCY

SUBJECT: Class Deviation-Relocation Costs

This supersedes the class deviation issued on August 6, 1999, under DAR Tracking Number 1999-A0001, Subject Class: Deviation--Relocation Costs.

I authorize a class deviation from the requirements of Federal Acquisition Regulation (FAR) 31.205-35, Relocation costs, when contracting with the United Defense LP Armament Systems Division.

This class deviation authorizes the use of the attached language in lieu of the language in FAR 31.205-35, Relocation costs, on all contracts with the United Defense LP Armament Systems Division. Along with a number of other changes, the attached language recognizes the reimbursement of relocation coats on a lump-sum basis, pursuant to an advance agreement with the Government,

This class deviation is approved through August 31, 2001, or until FAR 31.205-35 is revised, whichever event occur. first.

R. D. Kerrins, J

COL, USA

Acting Director, Defense Procurement

Attachment:

DSMC, Ft. Belvoir

PART 31-C0NTRACT COST PAINCIPLES AND PROCEDURES

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31.205-35 Relocation coats.

(a) Relocation costs are costs incident to the permanent change [assigned work location] (for an indefinite period or for a stated period, but in either event for not less than 12 months) of an existing employee or upon recruitment of a new employee. The following types of relocation costs are allowable as noted, subject to [the limitations in] paragraphs (b) and (f) of this subsection:

(1) Cost[s] of travel of the employee and members of the [employee's] immediate family (see 31.205-46) and transportation of the household and personal effects to the new location.

(2) Cost[s] of finding a new home, such as advance trips by [the] employees and spouse to locate living quarters, and temporary lodging during the transition period for [the] employee and [members of the employee's immediate family].

(3) Closing costs (i.e., brokerage fees, legal fees, appraisal fees, points, finance charges, etc.) incident to the disposition of [the] actual residence owned by the employee when notified of [the] transfer.

(4) Continuing costs of ownership of the vacant former actual residence being sold, such as maintenance of building and grounds (exclusive of fixing up expenses), utilities, taxes, property insurance, mortgage interest, after [the] settlement date or lease date of [a] new permanent residences .

(5) Other necessary and reasonable expenses normally incident to relocation, such as disconnecting and connecting household appliances; automobile registration; driver's license and use taxes; cutting and fitting rugs, draperies, and curtains; forfeited utility fees and deposits; and purchase of insurance against damage to or loss of personal property while in transit.

(6) Costs incident to acquiring a home in [the] new [work] location, except that

[t]hese costs will not be allowable for existing employees or newly recruited employees who, before the relocation, were not homeowners.

[(7)] Cost[s] of canceling an unexpired lease.

[(8) Payments for increased employee income or Federal Insurance Contributions Act taxes incident to allowable reimbursed relocation costs.

(9) Payments for spouse- employment assistance.]

(b) The costs described in paragraph (a) of this section must also meet the following criteria to be considered allowable:

(1) The move must be for the benefit of the employer.

(2) Reimbursement must be in accordance with an established policy or practice that is consistently followed by the employer and is designed to motivate employees to relocate promptly and economically. [Reimbursement may be on an actual cost or

appropriate lump-sum basis, or combination thoreof. However, use of a lump-sum basis in lieu of an actual cost basis is limited to those situations in which a contractor has an advance agreement with the Government.]

(3) The costs must not [be] otherwise unallowable under Subpart 31.2.

(c) The following types of costs ate [un]allowable:

(1) Loss on [the] sale of a home.

(2) Costs incident to acquiring a home in [the] new location as follows:

(i) Real estate brokers fees and commissions.

(ii) Cost[s] of litigation.

(iii) Real and personal property insurance against damage or loss of property.

(iv) Mortgage life insurance.

(v) Owner's title policy insurance when such insurance was not previously carried by the employee on the old residence[.] [H]owever, [the] cost of a mortgage title policy is allowable[.]

(vi) Property taxes and operating or maintenance costs.

(3) Continuing mortgage principal payments on [a] residence being sold.

([4]) Costs incident to furnishing equity or nonequity loans to employees or making arrangements with lenders for employees to obtain lower-than-market rate mortgage loans.

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