INSTRUCTIONS FOR DAC 26-687

Doing Business with Boeing

Boeing Commercial Airplanes (BCA) Terms and Conditions

I. DAC 26-687

These instructions are presented as a guide for use by the Seller in preparing Form DAC 26-687. These instructions are supplementary to those on the back of the Form DAC 26-687 and Part III hereof provides additional detailed information for the completion of and Form DAC 26-687. The purpose of this form is to provide a standard format by which the Seller submits to MDC a summary of incurred and estimated costs (and attached supporting information) suitable for detailed review and analysis.

As a part of the specific information required by Form DAC 26-687, Seller is requested to submit supporting schedules or other factual data sufficient to substantiate the proposed costs or prices. The supporting schedules or data should be appropriately identified and referenced in the "REF. NOTE" column of DAC Form 26-687. Seller is further requested to submit an explanation of any deviation from standard estimating practices and any information reasonably required to explain Seller's estimating process, including (a) the judgmental factors applied and the mathematical of other methods used in the estimate, including those used in projecting from known data, and (b) the contingencies used by the Seller in its proposed price.
When attachment of supporting cost or pricing data to Form DAC 26-687 is impracticable, the data will be specifically identified and described (with schedules as appropriate) and made available upon the request of MDC.
The formats provided for the presentation of the "Cost Elements" and the "Proposed Cost/Price" are not intended as rigid requirements. These may be presented in different format to be compatible with Seller's accounting system.

II. ADDITIONAL DETAILED INSTRUCTIONS

These instructions also supplement the instruction for the Form DAC 26-687.


Recurring and Nonrecurring Costs
		It is mandatory that recurring and nonrecurring costs be separately stated and clearly identified as such. The formats or supporting schedules for each are to follow the guidelines established below. Also, the amortization base for nonrecurring costs (i.e., over what number of units will the nonrecurring costs be recovered) must also be clearly identified. Nonrecurring costs shall include, but not necessarily be limited to, design, development and qualification tests (including hardware), special tooling and test equipment.

Material
	Purchased Parts and Subcontracted Items
		Furnish a priced bill of material which identifies the following:
			(1) List of part numbers and nomenclature.
			(2) Quantity of each part number required.
			(3) Price for each part and name and address of the source.
				(a) Copy of quotation used and explanation if not the lowest bid.
				(b) Number of quotations requested and received.
				(c) If estimated cost, basis for estimate (i.e., Kardex history, dollars per pound, etc.) - show the computations used.
			(4) Parts peculiar to this procurement.
			(5) Parts common to other orders; specify the quantity for all orders.
			(6) Modified standard parts; describe the extent of modification, the price of the standard part and the modified part.
	Raw Material
		Furnish the following information:
			(1) Raw material price per pound or sheet.
			(2) Quantity and type of raw material required.
			(3) Anticipated waste or scrap factors and basis for each.
			(4) Source for raw material prices, including:
				(a) Copy of quotation
				(b) Competition available.
				(c) Quantity buy discounts.
				(d) If estimated, basis for estimate.
	Standard Commercial Items
			(1) Identify part number and nomenclature.
			(2) Explain price method used and reason if priced at other than "lower of cost or market."
	Inter-Division/Company Transfers
		Furnish the following information:
			(1) Total estimated cost to Seller.
			(2) A separate list of the item(s)/service(s) furnished by the division(s) and a breakdown of the amount shown in the various elements of cost, i.e., labor, material, burden, etc.
			(3) Identify the division(s) by name and location.
			(4) Explain the amount of profit, if any, to feeder division(s).
	Other
		Describe and support, in the manner above, of any other material costs not otherwise included.

Material and Direct Labor Burdens and General and Administrative Expense (G&A)
	Furnish the following information:
	If approved, forward bidding rates for this period have been negotiated with a Government Audit Agency, attach a copy of the executed agreement for all classifications used in this proposal/quotation. Agreement must identify location and time period involved. It is permissible to reference an agreement on file with MDC.
	If negotiated bidding rates are not used, include a basis for the establishment of the rates:
		(1) Chart of accounts in the overhead category.
		(2) Sales history and sales forecasts for applicable period.
		(3) Cost actuals for past three years and projections or budgetary data for applicable time period.
		(4) Basis for allocation of burden pool to direct business.
		(5) Any escalation or judgmental increases must be identified.

Direct Labor Hours
	Furnish the following information:
	Estimated hours required by task or labor category.
	Estimating rationale:
		(1) Improvement curve projections.
		(2) Historical hours required.
		(3) Most recent actual experience in this or related work.
		(4) Work standards - explain how used in this estimate.
		(5) Identify the location at which the work will be accomplished.
		(6) Hours per pound or other parametric basis, explain how used and basis for development.
	Other
		Describe and support in the manner above of any other direct labor hours not otherwise included.

Direct Labor Rates
	The following information shall be furnished regarding rates used for direct labor.
	Furnish labor rates by labor classification by year for the past three years and projection through life of the Purchase Order/Contract. If Government approved bidding rates are used, furnish copies of the agreement.
	If applicable, basis for establishment of direct rates in lieu of Government approved rates:
		(1) Current direct labor rates and any judgmental increases.
		(2) Union labor agreements or contracts providing for escalation.
		(3) Manloading projections and current employment trends.

Travel
	Furnish separate information pertaining to:
		(1) Number of trips.
		(2) Purpose.
		(3) Destination.
		(4) Number and classification of affected personnel.

Special Tooling/Test Equipment
	Include the cost of only those special dies, jigs, fixtures and test equipment which will be peculiar to item(s) covered by this requirement. Standard and/or commercial equipment and capital equipment shall not be considered special tooling or test equipment charges. On a separate schedule(s) furnish:
		(1) A list of tooling acquired and proposed to be charged directly to this procurement which, upon completion of the procurement, will be delivered to MDC or MDC's customer or disposed of as directed by MDC.
		(2) A breakdown of the amount into its various elements, i.e., labor, material, burden, etc., if this item is not subcontracted.
		(3) A separate schedule of the information required by Paragraph 2.A above for each subcontract, if this item is subcontracted.

Data Items
	Estimated costs for data items shall be accompanied by supporting justification and shall include only those costs which are generated solely as a direct result of the imposition of the data requirement. Each data item shall be priced separately.
	Allowable data costs related to tasks such as design, development, test, evaluation, and management reporting shall include only those costs of reproduction and transmittal of such data. The cost to generate the data is included in the nonrecurring effort that creates the data (i.e., drawings, procedures, analysis, reports). If the data requirement imposes a format unique to that data otherwise maintained by the Seller, reformatting costs are a justifiable data cost.

Taxes, Customs Charges, Royalties, etc.

Include any applicable taxes, customs charges, royalties, etc., with supporting justification.

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