Previous memorandums dealt with FHWA`s policy regarding the acceptance and use of equipment rental managers for contract aircraft. These include Mr. Gendell`s memorandums of August 22, 1986, October 30, 1986 and December 23, 1986, and Mr. Weseman`s memorandum of January 27, 1988 (copy attached). The principle of equipment rental prices for contract equipment is that they must fairly represent the actual costs borne by the contractor for the possession and operation of the equipment. Because leases vary, it may be necessary to determine the specific operating costs of the lease. Additional eligible operating costs may be incurred, not covered by the contractor`s agreement, which should be reimbursed, such as fuel, chewing, field repair, etc. The contractor continues to face certain operating costs when the equipment is to be on hold. In order to provide fair compensation, custody allowances that appropriately reimburse the cost of owning the equipment to the contractor may be authorized for participation in federal aid.
The use of a watch rate is appropriate when the equipment has been made available for forced debts, but for reasons not attributable to the contractor, is stalled. The monitoring rate may be based on the contractor`s actual costs or on data provided in an approved rate guide. In both cases, operating costs should not be included in the rate used. Although there is currently no industry standard for standby rates, the common practice of courts is to reduce published rental rates for standby use by 50%. Therefore, the FHWA accepts the use of 50 per cent of the rental prices of a guide approved as a monitoring rate instead of the actual costs on standby of a contractor. The standby time should not exceed 8 hours per day, 40 hours per week or the annual usage times set by the manager. In general, device rental guides are based on usage and time. Since there is no equipment wear during the vacuum period, most rate managers generally need to be modified to avoid all usage costs. Time-related costs include “installation capital costs (CFCs), overall equipment operating costs and possibly certain depreciations.
Based on the above explanatory statement, FHWA found that if the Blue Book is used to calculate equipment rental costs for periods of less than one month, the fairest approach is to use an hourly rate that has been developed by dividing the monthly blue book rental rate by 176. When a contractor receives equipment through a third-party lease to be used in a forced account situation, his or her costs are usually billing fees. Billing fees should be comparable to other rental prices in the territory.