Class Deviation 2002-O0003
Interest Costs

I authorize a class deviation from the cost principle at Federal Acquisition Regulation (FAR) 31.205-20, Interest and other financial costs, for utilities privatization contracts under which previously Government-owned utility systems are conveyed by a Military Department or Defense Agency to a contractor. Pursuant to this deviation, the utilities privatization contractor will be permitted to recover its interest costs associated only with capital expenditures to acquire, renovate, replace, upgrade, and/or expand utility systems, and the contractor will not be permitted to receive facilities capital cost of money as a contract cost under FAR 31.205-10, Cost of money. Interest rates used to calculate allowable interest costs pursuant to this class deviation must be limited to 600 basis points above the Contract Disputes Act interest rate (41 U.S.C. 61 1) in effect at the time the contractor makes the capital expenditure. This class deviation is effective for utilities privatization contracts awarded from May 1, 2002 through April 30, 2007.

Effective Date: May 1, 2002 (20 years ago)
Expire Date: April 30, 2007 (15 years ago)
Official Documents: Memo
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