How an additional cost tuition rate is built

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1. Pricing only what the extra student adds

Additional cost is the increase in the full cost of training caused by adding international students, under Chapter 7 of Volume 15 of the Financial Management Regulation (FMR) (FMR Vol. 15, Ch. 7, para. 23.4.1). It is used for Tuition Rates C, D and E. The regulation traces the authority to three statutes. Section 21 of the Arms Export Control Act allows additional cost pricing for a purchaser that is receiving International Military Education and Training (IMET) at the same time, or that is designated a high-income country. The Foreign Assistance Act allows Foreign Military Financing recipients, Rate D, to be charged at a rate comparable to IMET, Rate E. Another provision allows military salaries to be left out when training is funded with American appropriated funds.

Which students qualify for which rate is covered in how training is priced on a case. How the full cost rates are built is covered in how a full cost tuition rate is built.

2. Working out the extra instructors

Courses are reviewed to decide whether to compute additional cost for a single course, such as pilot training, or for a group (FMR Vol. 15, Ch. 7, para. 23.4.1.2.1). Similar classroom or technical courses, or courses sharing instructors, may be grouped. For mixed classes, the agency determines the instructors and staff needed for the planned maximum American student load, then for the total load including international students (FMR Vol. 15, Ch. 7, para. 23.4.1.2.2). Where the total exceeds the maximum planned load, the difference in instructors and staff is the additional cost. Divided by the total number of students, it gives the additional cost per student.

Where instruction is one-for-one or one-for-two, the instructor is always an additional cost (FMR Vol. 15, Ch. 7, para. 23.4.1.2.3). If the whole class is international, instructors and staff are always additional. The regulation expects the instructor charge to be minimal where the ratio of students to instructors, or of American to international students, is high (FMR Vol. 15, Ch. 7, para. 23.4.1.2.4).

3. Other direct costs at the additional rate

All student travel and per diem tied to the training is an additional cost (FMR Vol. 15, Ch. 7, para. 23.4.2.2). So is overhaul and maintenance of major equipment computed on hourly use, charged on estimated utilization hours (FMR Vol. 15, Ch. 7, para. 23.4.2.3). Simulator hours are additional costs (FMR Vol. 15, Ch. 7, para. 23.4.2.4). For supplies, materials, training aids and ammunition, the additional cost is the replacement price of items that are not returned or reusable, including fuel (FMR Vol. 15, Ch. 7, para. 23.4.2.5).

Training American instructors or other personnel for special courses not normally run for American personnel is an additional cost (FMR Vol. 15, Ch. 7, para. 23.4.2.6.1). Where that training happens at an American facility, the benefiting country pays the course cost worked out on the full cost rules. Facilities or equipment acquired primarily to support international students, and their support costs, are incremental (FMR Vol. 15, Ch. 7, para. 23.4.2.6.2).

4. Indirect and billable costs

Additional cost rates carry standard weekly rates for base operating support, developed by the implementing agencies and adjusted each year (FMR Vol. 15, Ch. 7, para. 23.4.3). Only base operating costs incurred because international students attend are included. For the full cost rates, the regulation notes the statutory rule that the purchaser must pay the full cost of the service (FMR Vol. 15, Ch. 7, para. 23.3.4.1). For sales training priced at Rates C and D, the liability statement for damage caused by student negligence goes on the case (FMR Vol. 15, Ch. 7, para. 23.4.4.1). The full cost to the government of the Field Studies Program is an additional cost (FMR Vol. 15, Ch. 7, para. 23.4.4.2), and so is shipping retainable instructional materials where a course uses them (FMR Vol. 15, Ch. 7, para. 23.4.4.3).

The administrative surcharge is charged on sales training lines at Rates C and D, while Rate E, the IMET rate, is exempt (FMR Vol. 15, Ch. 7, para. 23.4.4.4). The unfunded civilian retirement charge paid into the Treasury is treated as a fixed cost and left out of Rates C to E (FMR Vol. 15, Ch. 7, para. 23.4.5).

5. Military and civilian pay

For full cost rates, military pay is priced at the composite standard rates for sales, which include the normal cost of retiree health care and the Defense Health Program acceleration factor (FMR Vol. 15, Ch. 7, para. 23.2.1.1). For additional cost rates, base pay and allowances of active duty personnel are treated as sunk costs and normally not charged (FMR Vol. 15, Ch. 7, para. 23.2.1.2). Costs tied to deploying as part of a training team, such as hazardous duty pay, family separation pay, travel and per diem, can be additional.

Three exceptions make military pay an additional cost (FMR Vol. 15, Ch. 7, para. 23.2.1.2). They are positions coded as reimbursable billets for sales, with budget materials showing that, personnel assigned to working capital fund activities, and National Guard or Reserve members called to active duty to support sales. Civilian pay at full cost is priced either at actual cost plus inflation and acceleration factors, the method recommended for tuition, or under the general personnel pricing rules (FMR Vol. 15, Ch. 7, para. 23.2.2.1). At additional cost, civilian pay may or may not be sunk (FMR Vol. 15, Ch. 7, para. 23.2.2.2). Reimbursable civilian billets and civilians in working capital fund activities count as additional. Costs of civilians deploying as part of a training team, such as hazardous duty pay, travel and per diem, can also be additional.

Key terms

Additional cost	The increase in training cost caused by adding international students, used for Rates C to E.
Sunk cost	A cost the government bears anyway, such as active duty base pay, normally not charged at additional cost.
Reimbursable billet	A position coded for reimbursement, whose pay is an additional cost.
Standard weekly rate	The base operating support charge added to additional cost tuition rates.
Rate E	The IMET rate, exempt from the administrative surcharge.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Mixed classes of American and international students still need support on site. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.