TE-KWAJ_006_Kwaj_Financial_Requirements_Manual_ver_5_0__6_Apr_2016.docx

USAG Kwajalein Atoll Financial Requirements Manual

United States Army Garrison Kwajalein Atoll PSC 701, Building 730

APO AP 96555-9998

FINANCIAL REQUIREMENTS MANUAL

Approved by:

MICHAEL M. LARSEN

COL, IN

Commanding

TABLE OF CONTENTS

1) PURPOSE

2) SCOPE

3) REFERENCES

4) DEFINITIONS

5) PAYMENTS

6) REVENUE COLLECTION PROCESS

7) ACCOUNTING POLICY

a. General

b. Cost Accounting

c. Accounting for Assets and Liabilities

d. Merchandising Services

e. Recreation and Entertainment Services

f. Housing Services

8) FINANCIAL MANAGEMENT

a. Contract Work Breakdown Structure

b. Funds Management Budget

c. Internal Operating Budget

APPENDIX A: REVENUE MATRIX

This manual will be reviewed on an annual basis by USAG Kwajalein, IMCOM Pacific Region G-8 and G-9 staffs with input from IMCOM HQ G-8 and G-9

1. PURPOSE. This manual sets forth special financial requirements placed upon the US Army Garrison (USAG) Kwajalein Atoll Contractor, hereafter referred to as the Contractor.

2. SCOPE. This document supplements the provisions of the Financial Policy and Rate Manual (FPRM), USAG Kwajalein Atoll. Any inconsistency in the manual shall be resolved by giving precedence in the following order: (1) Contract; (2) Financial Policy and Rate Manual; and (3) Financial Requirements Manual (FRM). Performance Work Statement (PWS) paragraphs referenced in this manual are from USAG Kwajalein Atoll 03-01.

3. REFERENCES.

a. AR 37-49, Budgeting, Funding, and Reimbursement for Base Operations Support of Army Activities, 15 October 1978.

b. AR 215-1, Military Morale, Welfare, and Recreation Programs and Nonappropriated Fund Instrumentalities, 24 September 2010

g. Nonappropriated Funds collected should be deposited into the Pacific Region Single Fund bank account on a daily basis.

b. The Contractor would deposit daily all revenues generated by community activities into the contractors account. The Contractor after reconciliation with the DCA, will make a weekly deposit into the PRSF local bank account for Recreational Lodging, Country Club Bar, Oceanview Club Bar, Outrigger Bar/Snack Bar, Small Boat Marinas (2 ea.), Arts and Crafts (2 ea.), Child and Youth Services, Bowling, and Golf (2 ea.) and provide copies of deposit slips and credit card reports to the USAG Kwajalein Director of Community Activities.

b. Cash collected must be deposited into the appropriate non-interest bearing bank account daily. Deposit slips must be retained. Contractor accounting systems must be able to track revenue by source of revenue,

c. The contractor will be responsible for reconciling the deposit slip with the point of sale “tapes” daily. These reconciliations, deposit slips and point of sale tapes will be provided weekly to the USAG Kwajalein Atoll Director of Community Activities and support the revenue matrix that is provided per the PWS.

(1) It is not the intent of this document to prescribe in detail all the requirements of an adequate system of accounts. It shall be the responsibility of the Contractor to establish and maintain an accounting system which meets the requirements of the Federal Acquisition Regulation (FAR), the contract, Generally Accepted Accounting Principles (GAAP) and other guidelines which may be applicable.

(2) The instructions set forth herein are not intended to impose inflexible restrictions upon the Contractor with respect to his organization or the mechanics of his accounting system. If revisions to the costs to be included in particular accounts are necessary or desirable due to organizational (or other) considerations, the Contractor shall ensure that prior notification has been given through the Commander, USAG Kwajalein Atoll, to the Contracting Officer.

b. Cost Accounting.

(1) The Contractor’s accounting system will require identification of all outputs (products and services) of an organizational entity and identification of all costs (both funded and unfunded) of the organizational entity to the products or services produced. Compliance with GAAP and the Cost Accounting Standards, as identified in FAR 52.230-2 and 52.230-6, require consistent and uniform application of both direct and indirect costs to products and services. Accurate cost allocation requires careful identification of costs to time periods and organizations and/or cost pools. The underlying discipline is that every dollar of costs incurred by the organizational entity must be related to a product or service produced by that organization. The cost center and job order are the primary modes of gathering, controlling and monitoring costs. The job order will be synonymous with the “cost objective”, as defined in the Cost Accounting Standards. Fund cost levels, as used in this section, refer to the accounting classification reference number (ACRN) level of the contract. Unfunded cost levels, as used in this section, refer to material, equipment and services administered by the contractor, but not funded through the contract (e.g., POL, MILSTRIP, transportation, etc.).

(2) Costs shall be transferred among accounts, as applicable, on a monthly basis. Corrections to previously reported data will be shown in the current period and explained by notes.

c. Accounting of Assets and Liabilities

(1) The Contractor shall maintain accounts of the assets and liabilities under the contract.

(b) Inventory on hand – broken out to major categories (e.g., general supplies, merchandise, provisions, food, alcoholic beverages, medical, POL, aviation, automotive) including supplies in retail outlets, shop stores (except for items expanded), dining facilities, etc., as well as in warehouses.

(c) Accounts payable – due to Pacific Region Single Fund (PRSF) and Resource Manager, USAG Kwajalein Atoll.

(4) Supplies shall be carried in inventory at net (invoice) cost (actual book cost for items provided or procured from Government sources at no cost to the contract).

d. Merchandising Services

(1) Costs to be included – all costs (and reimbursement) associated with performance of the function as described in the PWS, Section 8.C Merchandising Services (all Item Nos. are applicable except 8.C.4.a Banking Services); and 9.C Food Services, except Item no. 9.C.2.p and Table 9-1, Item No. 9-1.1 (base food service activities).

(2) The Contractor shall develop retail-selling prices, or percentages of markup, for all merchandising activities for approval by the Commander, USAG Kwajalein Atoll, and implement as directed by the Contracting Officer’s Representative (COR). Conduct biannual fee analysis to ensure fees are commensurate with similar services provided at other Military installations. Fee analysis shall be provided to the Garrison for review prior to the development of retail-selling prices, in accordance with PWS. These prices shall be sufficient to cover all costs of the retail operations and to generate funds over and above these costs for transfer to the Pacific Region Single Fund (PRSF) or the U.S. Treasury as applicable. The retail food store pricing shall be sufficient to cover the cost of operations (cost of food, utilities, etc.) or as otherwise requested by the Commander, USAG Kwajalein Atoll, and directed by the COR.

(3) The source of funding for facility construction shall be determined by the Commander, USAG Kwajalein Atoll or his/her designated representative, in accordance with and pursuant to applicable laws and regulations.

(4) Examples of costs which shall be charged to merchandising and recovered from retail sales include:

(a) Merchandising personnel salary costs. This shall also include applicable payroll taxes, insurance, and other fringe benefits applicable.

(e) Portable equipment to be used in merchandising operations. Movement, installation, maintenance, and removal of portable equipment.

(f) Janitorial services and supplies.

(g) Services in support of merchandising operations by other activities (e.g., laundry, bakery, food store delivery, etc.)

(h) Transportation of goods from base support supply warehouses to merchandising facilities.

(5) The following costs shall be charged to Base Support Funds:

(a) Maintenance, repair, and replacement of facilities, including installed building equipment.

(b) Common base support services (e.g., fire protection, pest control, trash and garbage pickup, and sanitation inspections).

(c) Receipt and handling costs inherent to getting goods into base support supply warehouses, storing goods in base support supply warehouses, and retrieval and issue actions accomplished within base support supply warehouses.

(d) “First Destination” transportation costs (the initial cost of transporting materials from the supplier to USAG Kwajalein).

(6) The amount of funds to be generated shall be adequate to provide funds for:

(a) All costs associated with the merchandising operations.

(b) Purchase of new and replacement merchandising and recreation equipment and other improvements within the specified activities.

(c) Coverage of merchandising inventory adjustments.

(d) Other items of PRSF costs defined under Recreation and Entertainment Services within the specified activities.

(7) The Contractor shall conduct inventories of merchandise items as specified by the PWS.

(8) All sales and services from merchandising activities shall be conducted on a cash basis. If club facilities are to be used for private parties, financial arrangements must be made by the party sponsor in advance.

(9) The amount of income from merchandising activities above operating costs shall be determined monthly. These transactions shall be reflected in the monthly statement. Any monthly merchandising activity losses will be briefed to the Commander, USAG Kwajalein Atoll.

(10) The following apply to inventory adjustments of items procured for resale (merchandising) or for dining usage:

(a) Losses sustained as a result of the failure of Government transportation or while in the care, custody, and control of Government contracted careers shall be identified and reported on DD Form 470, Cargo Outturn Reports, and Standard Form 361; Transportation Discrepancy Report. The extent that damages indicated on the outturn report are clearly identifiable to the foregoing cause or where loss or damage can be attributable to Government contracted handlers or packers, and to the extent that they are confirmed by the authorized representative of the Contracting Officer, these losses shall be charged to base support. (Charging of losses related to cargo consigned to other range contractors will be the responsibility of those contractors.) Charges to base support for losses due to any other extraordinary conditions or circumstances will be determined on an individual basis by the Contracting Officer. It is considered that any such circumstances will be extremely limited. It is not anticipated that favorable consideration will be given to recommendations to charge base support for damages or losses based upon general circumstances such as “inadequacy of protective storage” and “climatic conditions” or to circumstances which are the responsibility of the Contractor, such as pest infestation.

(b) Except as provided in paragraph (10) (a) above, all losses and gains of provisions shall be charged to either dining or merchandising if usage is restricted to one or the other, or charged to both on a pro rata basis based upon usage history if used by both dining and merchandising.

(c) Except as provided in paragraph (10) (a) above, all inventory losses and gains of items procured for resale shall be charged to merchandising.

e. Recreation, Child and Youth Services and Entertainment Services.

(1) Work accomplished for Recreational and Child and Youth Services activities will not incur the normal load factors applied to others for LS. Policy pertaining to the allocation of LS cost is set forth in Chapter 3 of the FPRM.

(2) Selected recreation services (Recreational Lodging, Country Club Bar, Oceanview Club Bar, Outrigger Bar/Snack Bar, Small Boat Marinas (2 ea.), Arts and Crafts (2 ea.), Child and Youth Services, Bowling, and Golf (2 ea.) will be funded with Base Support funds until the contract modification that establishes the MWR Contract Line Item Numbers (CLINs) is signed. Once signed, the Pacific Region Single Fund (PRSF) will provide funding by way of reimbursing the USAG-KA. All other costs identifiable with the remaining Community Activity services shall continue to be charged to Base Operations Support (BOS) Funds and remains within the BOS CLIN:

(a) Maintenance, repair, original outfitting, and replacement of facilities, including installed building equipment.

(b) Common base support services (e.g., fire protection, pest control, trash and garbage pickup, and sanitation inspections).

(c) Utilities (e.g., telephone, electrical, water, and sewage disposal).

(d) Receipt and handling costs inherent to getting goods into base support warehouses, storing goods in base support warehouses, and retrieval and issue actions accomplished within base support supply warehouses.

(e) Janitorial services and supplies for Recreation and Child and Youth Services facilities, areas, or spaces.

(3) The Contractor shall invoice full cost of Community Activity Programs identified in e2 to the USAG-KA. All revenues generated by the identified activities in e2 will be deposited into the PRSF local banking account. Costs to be charged to the PRSF include, costs (and reimbursements) associated with performance of the Recreational Lodging, Country Club Bar, Oceanview Club Bar, Outrigger Bar/Snack Bar, Small Boat Marinas (2 ea.), Arts and Crafts (2 ea.), Child and Youth Services, Bowling, and Golf (2 ea.). All other Business Operations and Community Activities functions as listed in the PWS, Table 10-1, are included in Base Operation Support Funds based on Command Direction. Examples are as follows:

(a) All operating activities level personnel such as managers of various facilities, sports officials, scorekeepers, lifeguards, bowling alley operators, hobby shop employees, bookkeepers and all other recreational activity personnel not specifically excluded herein. This includes payroll taxes, insurance, and other fringe benefits applicable to the payments to these employees.

(b) Expendable material, supplies, and services utilized at the operating activity level or utilized by operating activity participants.

(c) Furniture, furnishings, equipment and portable equipment.

(d) Preventative maintenance, repair and overhaul of furniture, furnishings, and equipment.

(e) Services in support of activities by other activities (e.g., laundry).

(f) Transportation of goods from base support supply warehouses to facilities.

(4) A completely separate set of bookkeeping records shall be maintained for the activities financed by the Pacific Region Single Fund (PRSF). These records shall be maintained on a current basis, adjusted and closed on the contractor’s accounting month basis.

(5) Accounting will be on a modified accrual basis, which recognizes revenues when measurable and available. “Available” is defined to denote revenue collectable within the current period, or soon enough thereafter, to be used to pay liabilities of the current period. Expenditures are recognized when a liability to be met from fund assets is incurred.

(6) Inventory accounting at the individual recreational activity level is mandatory (e.g. bowling alley, pool, golf, child and youth services).

(7) Labor, equipment, supplies, and other services, may be provided from or procured through normal Base Support channels. Items related to Recreational Lodging, Country Club Bar, Oceanview Club Bar, Outrigger Bar/Snack Bar, Small Boat Marinas (2 ea.), Arts and Crafts (2 ea.), Child and Youth Services, Bowling, and Golf (2 ea.) require approval by the USAG Kwajalein Atoll Director of Community Activities.

(8) All property of recreation activities shall be accounted for as prescribed by contract provisions whether procured from Base Support Funds or the Pacific Region Single Fund (PRSF). Separate property records shall be maintained for equipment items procured by the Pacific Region Single Fund (PRSF).

(9) The Contractor shall obtain a signed custody receipt for each item of recreation equipment loaned (or rented). The receipt shall confirm that the person obtaining the equipment is responsible for loss or damage (beyond normal wear) of the equipment. If a rental charge is applicable, the receipt will state the amount. The Contractor shall collect amounts due for these reasons and deposit the amounts into the escrow account.

(10) The requirements for approval of equipment procured for the Pacific Region Single Fund (PRSF) are retained by the NAFI. The requirements for approval of equipment procured for the USAG Kwajalein Atoll are the same as for other Base Support Funded items.

(11) A Community Action Plan shall be submitted in accordance with PWS Item No. 10.c.1.a.

(1) The Contractor shall establish an annual budget process for management control of contract costs. The objective is to establish and maintain an Annual Budget Target throughout the life of the contract whereby the resources to be made available for a fiscal year are to cover contract costs, including reimbursables, obligations, and award fee accruals incurred during that period.

(2) The Contracting Officer will provide the Contractor with a budget guidance letter in May to facilitate the establishment of the Annual Budget Target. The Contractor shall submit a preliminary budget to the Commander, USAG Kwajaelin Atoll in June for review. Improvement and Modernization amounts included in the budget will be in accordance with the contract unless otherwise directed by the Contracting Officer. The budget guidance letter will delineate the number and types of missions to be supported during the budget year, ground rules, and other information to be used by the Contractor during budget formulation. The Contractor shall submit the budgets to the Commander, USAG Kwajalein Atoll no later than 60 days prior to the new Fiscal Year.

(3) The Contractor shall establish budgeting procedures and systems that allow for the establishment of a time phased budget by cost element and Cost Center along with tracking and reporting. These procedures shall establish guidelines for initial authorization, budget modification, and change control.

(4) Internal budget changes are realignments between Cost Centers and/or cost elements within the existing annual requirements. Internal changes must be within the contract scope and the Contracting Officer’s budget guidance letter. The Contractor shall provide notification of internal changes to CWBS element budgets. External budget changes are increases or decreases to the Annual Budget Target. They are the results of formal notifications of changes in scope or changes to the requirements delineated in the budget guidance letter. Only the Contracting Officer can authorize external budget changes.

(5) The Contractor’s financial systems shall provide management information reporting that facilitates monitoring of budget versus actual costs at the cost center and summary level. When there is sufficient evidence that budget amounts will significantly exceed or under run the established Funds Management Budget, the estimated variance shall be reported with projected amounts and explanations. These estimates shall be time phased by element of cost and independent of planned budget levels.

c. Internal Operating Budget

(1) The Contractor shall establish annual budgets for management control of total operational costs within the CWBS. Operating costs include all costs allocated to a Cost Center, including material issues and Government-furnished items. The basis for establishment of the annual Internal Operating Budget shall include but not limited to the Contracting Officers budget guidance letter.

(2) The Contractor shall establish budgeting procedures and systems that allow for the establishment of a time phased budget by cost element and Cost Center along with tracking and reporting. These procedures shall establish guidelines for initial authorization, budget modification, and change control.

(3) The Contractor’s financial systems shall provide management information reporting that shows the monitoring of budget versus actual costs at the cost center and summary level. When there is sufficient evidence that budget amounts will significantly exceed or under-run the established Internal Operation Budget, the estimated variance shall be reported together with projected amounts and explanations. These estimates shall be time phased by element of cost and independent of planned budget levels.

APPENDIX A: Revenue Matrix

2E – Reimbursements from Matson for Damaged Cargo

2F – Landing Fees

10 USC 2681

Economy Act procedures required. Implement ISSAs/Properly utilize MIPRs

Other

Reimbursable labor/material, reproduction services, finance charges, personal shipments, etc.

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