Maryland Regulation|Section 21.09.01.14 - Material Costs

                                                
 21.09.01.14. Material Costs 
 
A. Material costs are the costs of all supplies, including raw materials, parts, and components (whether acquired by purchase from an outside source or acquired by transfer from any division, subsidiary, or affiliate under the common control of the contractor), which are acquired in order to perform the contract. Material costs are allowable, subject to §§B and C of this regulation. In determining material costs, consideration shall be given to reasonable spoilage, reasonable inventory losses, and reasonable overages.
 
B. Material costs shall include adjustments for all available discounts, refunds, rebates, and allowances which the contractor reasonably should take under the circumstances, and for credits for proceeds the contractor received or reasonably should receive from salvage and material returned to suppliers.
 
C. Allowance for all materials transferred from any division (including the division performing the contract), subsidiary, or affiliate under the common control of the contractor shall be made on the basis of costs incurred by the transferor (determined in accordance with this subtitle), except the transfer may be made at the established price if the price of materials is not determined to be unreasonable by the procurement officer, the price is not higher than the transferor's current sales price to its most favored customer for a similar quantity under similar payment and delivery conditions, and the price is established either by the: 
 
(1) Established catalog price; or
 
(2) Lowest price offer obtained as a result of a competitive procurement conducted with other businesses that normally produce the item in similar quantities.
 (Effective date: July 1, 1981 (8:13 Md. R. II-5) Regulations .14C amended effective January 9, 1989 (15:27 Md. R. 3138))