PS Magazine - TB 43-PS-680
PS, The Preventative Maintenance Monthly
ISSUE 680
JULY 2009
58
PS 680
JUL 09
E
xchange Pricing (EP) in the Army has been in transition since April 2008. How
EP has changed directly affects units—right in the pocketbook. Here’s what you
should know.
The Army was experiencing problems with granting excess credit in its logistics
system. DOD Comptroller solutions became the evolving EP system.
EP rules require Army-managed NSNs that are on an existing or planned national
maintenance program to have an EP and a standard price (SP).
When an EP item is issued, a like unserviceable item, as deFned by the Order of
Use (OOU) Fle, must be returned within the 60-day delay days period (DDP) or the
difference between the standard and exchange price will be charged to the unit.
The intent of EP is to increase the return of reparable items to the supply system
and to improve national visibility of reparables. EP also reduces the number of
Fnancial transactions by limiting unserviceable and serviceable credit to only
designated EP items.
Exchange
Pricing (EP):
Past vs
Present
Standard Price (SP) =
Latest Acquisition Cost
+ Cost Recovery Rate
(CRR)
Exchange Price (EP) =
Loaded Repair Cost
+ Cost Recovery Rate
(CRR)
PAST
ENGINE, DIESEL:
Standard price:
$494,832.00
Unserviceable credit:
$246,094.00
Serviceable return
rate credit:
$432,545.00
PRESENT
ENGINE, DIESEL:
Standard price:
$494,832.00
EP price:
$248,738.00
EP delta bill:
$246,094.00
(no turn-in)
Serviceable exchange
price return credit
(EP minus CRR):
$186,451.00
Exchange Pricing
Tenets
•
Shift from past credit on turn-in
to charge of “delta” (SP minus EP)
if not turned in within Delay Days
Period (DDP) (60 days set by HQDA)
•
No unserviceable credit for Army
customers
•
NSNs with on an existing or
planned national repair program
have an assigned EP value
•
Serviceable Exchange Price Return
(SEPR) credited for serviceable
turn-in
The New Exchange Pricing Practice
Customers are charged the exchange price (EP) up front. But, the EP is only available
for EP designated items. The EP includes the loaded repair cost and an amount for cost
recovery. The EP for the diesel engine = $248,738.
If the unit returns the
unserviceable engine
to the supply system within the delay days
period (DDP), the action is complete—there are no additional customer changes. However,
if the unit does not return the unserviceable engine within the DDP, it is charged the delta:
the SP ($494,832) minus the EP ($248,738) — another $246,094.
If a unit returns a
serviceable engine
to the supply system, they get a serviceable EP
return (SEPR) credit (the EP ($248,738) minus an amount for cost recovery). In this example,
the serviceable exchange credit for the diesel engine = $186,451.
Past Practice
When a customer bought an Army-managed item they were charged a standard price
(SP), which was equal to the latest acquisition cost plus an amount for cost recovery. In
this example, the SP for the diesel engine was $494,832. When the customer returned the
unserviceable engine,
they got an unserviceable credit equal to the SP minus the sum of the
loaded repair cost recovery (CRR): $246,094. The customer’s net cost
for the replacement
part was $248,738. If, however, the customer returned a
serviceable engine,
they got a
serviceable credit of $432,545.
The Army’s
New
Way
to Manage Reparables
Exchange
Pricing…
yes sir,
today we
received
this
repair
part…
…and we only
paid
this
exchange price.
so, now we have
to return the
old part within
60 days…
…or we have
to pay an
additional
charge.
Several
changes to
exchange
pricing will
affect your
unit’s check-
book. Here’s
the scoop…
680.58-59.indd
1-2
6/1/09
5:12:41 PM
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