31.205-20 Interest and other financial costs.

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Section 2. FAR 31.205-20 - Interest and Other Financial Costs. If a deviation under section 1 includes a deviation from the requirements at FAR 31.205-20, the following conditions, in addition to those under section 1, must also be met. This deviation permits, but does not require, the Contracting Officer to waive the requirements of FAR 31.205-20.

This deviation applies only when all of the following conditions, as well as the conditions of section 1, are met:

a.  The contracting officer determines, in writing, that:

(i)  Allowing the costs will significantly reduce the costs of the United States for the utility services provided under the subject contract;

(ii)  The interest costs and directly related financial costs incurred to obtain loans or borrow capital from third-party financial institutions are reasonable based on the particular facts and circumstances involved; and

(iii)  The interest and directly related financial costs are associated with capital expenditures to acquire, renovate, upgrade, and expand utility systems under the subject utility services contract.

b.  The contract states that cost of money is an unallowable contract cost under FAR 31.205-10, Cost of money, either during or after the period of the loan for all assets to which the loan relates; and

c.  Interest rates used to calculate allowable costs are limited to 600 basis points above the Contract Disputes Act interest rate (41 U.S.C. § 611) in effect at the time the contractor makes the capital expenditure.

d.  The deviation does not apply to any imputed interest on the contractor's own funds.