Staff Instruction (SI)

From: Transport Canada

Cost Recovery for Aeronautical Product Certification

File No.: 5009-32-2 SI No.: GEN-004
RDIMS No.: 349293-V6 Issue No.: 01
Issuing Branch: Aircraft Certification Effective Date: 2004-02-05

1.0 Introduction

1.1 Purpose
1.2 Guidance Applicability
1.3 Description of Changes
1.4 Termination

2.0 Reference Documents

2.1 Reference Documents
2.2 Cancelled Documents

3.0 Background

4.0 Fees

4.1 Fixed Fee Projects
4.2 Hourly Fee Projects
4.3 Process and Responsibilities
4.4 SCRAM Procedures

5.0 Incremental Expenses

6.0 Administrative Services

7.0 Headquarters Contacts

Appendix A - Cost Recovery Principles, Criteria and Procedures for Projects for Aircraft Certification

Appendix B - Cost Recovery Principles, Criteria and Procedures on Aircraft Certification Projects for Maintenance and Manufacturing

Appendix C - SCRAM Notification Form for Maintenance & Manufacturing Employees

1.0 Introduction

1.1 Purpose

The purpose of this Staff Instruction (SI) is to provide procedural guidelines regarding the cost recovery of fees and incremental expenses associated with Aircraft Certification projects.

1.2 Guidance Applicability

This document is applicable to Headquarters and the Regional Aircraft Certification personnel and Maintenance and Manufacturing (M&M) personnel.

1.3 Description of Changes

This document is a new issue.

1.4 Termination

This document does not have a terminating action. It will however, be reviewed periodically for suitability of content.

2.0 Reference Documents

2.1 Reference Documents

  1. Part 1 Subpart 104 of the Canadian Aviation Regulations (CAR)--Charges

  2. Civil Aviation Directive (CAD) 3--Recovering the Incremental Costs of Providing Services Inside / Outside Canada

  3. Standardized Cost Recovery and Activity Monitoring (SCRAM) guidelines

  4. Travel Directive (Treasury Board of Canada)

  5. LEX Employee's Guide (Transport Canada)

2.2 Cancelled Documents

None.

3.0 Background

CAR 104 provides for the application of charges for the issue or re-issue of aeronautical product approval documents. These charges take the form of fees for the issue or re-issue of the document and the recovery of the incremental expenses incurred in processing the approval. The fees may be fixed or calculated on the basis of an hourly charge. In addition to the need for tracking hours spent on certification projects in support of cost recovery, there is a need to track the number of hours spent on projects in order that future year projections can be made, for project planning purposes and to support proposing/justifying possible future adjustments in fee schedules, etc.

These hours are entered into the Standardized Cost Recovery and Activity Monitoring System (SCRAM). A record of activities is then produced, the accuracy of which is dependant on the commitment of each individual for inputs of time against specific activities for a given project.

Specialists/inspectors are required to log their hourly inputs against projects and to identify the activities as cost recoverable or not. Breakdowns of the activities that are cost recoverable and those that are not are provided for Aircraft Certification in Appendix A and for Aircraft Maintenance and Manufacturing in Appendix B.

The basic principle in determining what is or is not cost recoverable is that charges are levied only where an applicant is the direct beneficiary of the services provided. However, even for activities that may be chargeable to the applicant, what services are provided will further determine if that particular activity is cost recoverable or not. An example would be the hours used for attending a type board meeting by those attending just for information or training sake. Charging for this time would be considered a duplication of services. Only the hours for designated team members should be marked as cost recoverable.

Charges are not levied for services where Transport Canada is the beneficiary, for safety or standards related items or for regulatory-to-regulatory discussions. As well, cost recovery is not applicable in cases where fixed fees are being charged for the specific activity. For example, for a project where a Supplemental Type Certificate (STC) is being produced at the same time as a Type Certificate (TC), and whereas a fixed fee is charged for STC's, the hours associated with the STC activity would not be charged against the main type certification project. For M&M, an experimental flight permit for developmental aircraft has a fixed fee; therefore the associated hours cannot be included in the hourly billings of a type certification project as this would be double billing to the applicants.

4.0 Fees

4.1 Fixed Fee Projects

Fees associated with the issuance of certificates for Supplemental Type Certificates (STCs), Appliance Type Certificates (APTCs), and Level 1 Airworthiness Reviews, etc. (as per CAR 104), are fixed fees. The payment of incremental expenses is additional where applicable.

Fixed fees are recorded using a one-time charge for the specific activity or projects.

4.2 Hourly Fee Projects

Fees associated with Domestic aeronautical products and foreign products certified through a Level 2 or 3 Airworthiness review are charged on an hourly cost base with the total amount not exceeding the maximum fees set out in CAR 104 Schedule V. The payment of incremental expenses is additional where applicable.

4.3 Process and Responsibilities

Recording of hours starts when an application is received from a client. The Project Management division establishes and/or makes changes to the projects within the SCRAM system. The Project Manager notifies team members of the project against which to charge their time.

The specialists/inspectors are responsible for reporting their hours in SCRAM. Supervisors should regularly check and verify the inputs. On a quarterly basis, the Chief, Policy, Technology and Special Projects (AARDB) confirms that the data is ready for cost recovery purposes. Once these hours are retrieved by project and individual, divided by cost recoverable and non-cost recoverable hours, the appropriate Project Manager and Chief, Project Management (AARDE) will review and verify that these are reasonable for billing and will initial-off against all the project hours. (These hours may require adjustment where anomalies appear and in order to provide an audit trail, the SCRAM database will also be adjusted to reflect any changes in the billing data.) The extracted hours are used to calculate the amounts for the billings to applicants.

Each invoice has a listing of team member hours as an attachment, for backup justification.

Hourly cost recovery activities continue until the fee cap is reached or the Type Certificate (TC) is issued. Even though the fee is for the issuance of the Type Certificate and therefore the closure of a project is usually upon type certification, exceptions often exist, such as when the applicant has been unable to complete all the activities necessary to deliver a product to the client. Agreement under such circumstances, between Transport Canada and the applicant is required and cost recovery action may continue until a Certificate of Airworthiness (C of A) is issued. When the Project Manager is satisfied that all of the activities required to satisfy the Type Certificate have been completed, he will advise closure of the project, which then defaults to post-certification activities.

4.4 SCRAM Procedures

  1. Accessing SCRAM
      
    SCRAM is accessed through the Transport Canada Intranet, using Internet Explorer. Employees require a userid and password to log into SCRAM. These are obtained through AARDB, along with a brief SCRAM training session, as required.

  1. Entering Time
      

    1. Once logged into SCRAM, time is entered against Projects through the Timesheets screen and is grouped into two Categories: General and Certification. M&M staff will be entering time only against projects in the Certification Category.

    2. Users select the Category, e.g. Domestic Fixed Wing, by clicking on the radio button beside it. After selecting the Category, the user selects the Project from the yellow drop down list entitled "Task or Project Description".

    3. The number of hours is entered into the Time field, rounded off to the nearest 0.25-hour increment, from a minimum of 0.25 hours up to a maximum of 24 hours.

    4. The OT (Overtime) box is checked if the time is identified as overtime hours, the CR (Cost Recoverable) box is left checked if the hours are considered cost recoverable (M&M will enter only cost recoverable hours), and the Travel box is checked if the time entered is for time spent on travel with respect to the Project. When some of the time is not overtime, the task will require two entries-one to outline the non-overtime hours and one to outline the overtime hours.

    5. Users should enter a brief description in the Comments field to identify what specific activity they were working on. M&M must enter a description.

    6. Once all the fields have been entered, users save the entry by using the Save key. For Aircraft Certification staff, entries are completed and saved for all activities worked each day; M&M are only obligated to enter cost recoverable hours worked on Certification activities (however, at M&M discretion, they may enter all hours).

  1. Reports
      
    Personal Reports are available for all users. Division Chiefs and Regional Managers also have access to Division Reports to view entries of their officers. A list of available reports is accessed through the Reports screen. Users will select Start and End Dates and click on Preview Report to view. Reports may be printed after they are previewed.

  1. Exiting SCRAM
      
    Once users have completed their entries, clicking the Log Off option will end the SCRAM session.

5.0 Incremental Expenses

In processing applications, incremental expenses are recovered from clients for: transportation, lodging, meals, incidentals, and overtime expenses incurred outside Canada. Occasionally, incremental expenses incurred within Canada, under extraordinary circumstances, are recovered from clients in accordance with Civil Aviation Directive No. 3. Recovery of incremental expenses is gathered for each project/applicant on a quarterly basis.

The incremental expenses are extracted from the Travel Expense Claims and the Leave and Extra Duty (LEX) printouts. These expenses are in addition to the fees charged. For cost recoverable travel, individuals are responsible for submitting a copy of their overtime printouts (Leave and Extra Duty report as per the Transport Canada's LEX Employee's Guide) and Travel Expense Claims (and per the Treasury Board's Travel Directive) with complete backup information to Administrative Services. Each LEX entry and Travel Expense Claim is to identify that they are cost recoverable and to which project/client they relate to, as well as any split in the expenses for a trip in which two projects are covered or a portion is non-cost recoverable. An explanation should be provided for any unusual aspects of the claim, such as notes or information regarding credits on air tickets or costs that are not attributable to the project.

These claims and reports are received and audited by the respective Administration section and a copy is forwarded to the Cost Recovery Officer, Project Management (CRO). They are then grouped together per project for quarterly billings to clients. The Project Manager and the Chief, Project Management (AARDE) are to verify and accept that the billings are reasonable for the collective package of team member claims.

In order for cost recovery action to be taken under extraordinary circumstances, notification in the form of an Agreement as per Civil Aviation Directive No. 3 should be submitted with the claim and/or the name of the Project Manager, Regional Manager or Engineer responsible for the requested activity.

For M&M, the travel expenses, etc. are those that are associated with a request from a Project Manager. Once noted as an Aircraft Certification project and as cost recoverable, the Administrative Officer forwards a copy to the CRO with the appropriate financial coding identified.

As justification for each invoice, the client receives a detailed listing of the trips involved. As OPI, the Project Management Division is expected to provide the initial response to any client questions or challenges to the invoices received.

6.0 Administrative Services

For controlling access privileges to SCRAM application, the Administrative Services will notify the SCRAM administrator and the CRO of any new employee or of a change in status of an employee.

The Administrative Services copies and forwards applicable Travel Expense Claims and overtime reports, with proper financial coding, to the CRO.

7.0 Headquarters Contacts

An online version of the SCRAM Help Manual is available or a hardcopy may be obtained through Policy, Technology & Special Projects (AARDB).

For more information please contact:

Policy Standards Coordinator (AARDH/P)
Phone: (613) 990-3923
Facsimile: (613) 996-9178
E-mail: AARDH-P@tc.gc.ca

Original signed by Maher Khouzam

Maher Khouzam
Chief, Regulatory Standards
Aircraft Certification Branch

Appendix A - Cost Recovery Principles, Criteria and Procedures for Projects for Aircraft Certification

  1. Principles:
      

    1. Charges are levied where the applicant is beneficiary of services;

    2. Charges are not levied where Transport Canada is beneficiary of services;

    3. Charges are not levied for Safety and Standards related items;

    4. Charges are not levied for regulatory to regulatory discussions - i.e. produce specific Memorandum of Understanding (MOU);

    5. Time based charges are not levied where fixed fees are being paid for the specified activity.

  1. Who Charges:
      

    1. Project Managers;

    2. Specialists working directly on type certification projects from AARDC, AARDD & AARDE - Test Pilot's, Engineers, General Technical Officers;

    3. AARDG on foreign airworthiness reviews and T.C. transfers;

    4. Supervisor's working as Specialists/Inspectors on type certification projects;

    5. Maintenance and Manufacturing Inspectors working directly on foreign type certification projects and manufacturing activities associated with type certification.

  1. Who Does Not Charge:
      

    1. Chiefs;

    2. AARDA, AARDB, AARDG (Domestic), AARDH, AARDL, and Operations personnel;

    3. Administrative personnel.

  1. What Activities are Chargeable:
      

    1. Activities in support of the issuance of a type certificate for a domestic product, including but not limited to:
        

      1. Type Board Meetings;

      2. Design Review Meetings;

      3. Issue Papers;

      4. Review of compliance documents;

      5. Test witnessing;

      6. Flight testing;

      7. Function and Reliability flying;

      8. Instructions for Continuing Airworthiness;

      9. Maintenance, Installation and Overhaul Manual approvals;

      10. Initial Flight Manual approval;

      11. Initial MMEL development and approval;

      12. Type Design Definition;

      13. Compliance Program;

      14. Support to Foreign Airworthiness Authorities:
          

        1. Application to Foreign Authority;

        2. Assistance and participation in the discussions leading to the certification of Canadian products abroad;

        3. Test witnessing when requested;

        4. Findings of Compliance on behalf of Foreign Authority;

        5. Statement on behalf of Applicant that product meets foreign type certification basis.
           

      1. Equivalent Safety.
        Chargeable Activities (Cont'd)
          

    1. Activities in support of the issuance of a type certificate for a foreign product, including but not limited to:
        

      1. Initial Briefing from the Applicant;

      2. Review of Compliance Documentation;

      3. Review and acceptance of AFM;

      4. Review of domestic MMEL and development of Transport Canada Supplement to the MMEL;

      5. On-Site Review of the Product;

      6. Type Design Examination Flights;

      7. Findings - Issue Papers, Concern Papers.

        (The above lists would also cover activities leading to and subsequent to, such as preparatory work and action items.)
          

    1. Activities in support of transfer of type certificates, including but not limited to:
        

      1. Review of applicant's capability and organization;

      2. Obtain knowledge of the product design (for initial Canadian design responsibility);

      3. Confirm the Canadian type certification basis;

      4. Conduct familiarization flights where applicable;

      5. Obtain and review service history, major operational problems, and concur with the corrective actions taken;

      6. Confirm operating limitations and any other conditions or limitations prescribed for the product;

      7. Confirm configuration definition;

      8. Review and approval of Flight Manual;

      9. Review and approval of Instructions for Continued Airworthiness, including Airworthiness Limitations.

        (These activities assume a Canadian Type Certificate on the basis of an existing Foreign Type Certificate or on the eligibility list, see AN #B038.)

  1. What Activities are Not Chargeable:
      

    1. Product specific MOU's and working arrangements - Regulatory to Regulatory Authority;

    2. Briefings from potential applicants for information purposes only;

    3. Review of Foreign Regulatory Airworthiness System;

    4. Acquisition of knowledge by Transport Canada personnel on technical matters
      (e.g. fly-by-wire);

    5. Duplication of services/personnel involved in on-the-job training of individuals such as during company visits;

    6. Development of Standards and Special Conditions;

    7. Management and Administration Task Guidance;

    8. Financial - cost recovery estimates, analysis, etc.;

    9. General Administration - mail sorting, logging, filing, boardroom bookings, travel arrangement, etc.;

    10. Personnel Administration - overtime, travel, training forms, etc.;

    11. General applicant inquiries unrelated to active projects;

    12. Meetings not associated with operational tasks;

    13. Personnel - staffing, staff relations, classification, pay and benefits, training administration, appraisals;

    14. Planning - Treasury Board submissions, operational plan, working plan, goals;

    15. Material Management - inventories, equipment procurement, security, accommodation/facilities;

    16. Medical Validation.

      Note      : Due to ever changing administrative roles, functions and responsibilities within Civil Aviation, the above listing of activities is not to be considered all inclusive, and is therefore provided for example purposes only.

  1. Procedures and Responsibilities:

    Opening a project in SCRAM is the responsibility of the Project Manager in consultation with Chief, Project Management (AARDE) and should account for the criteria listed. Project Team should be identified and informed that they have been assigned to the team.

    The Project Manager will de-activate (close) the SCRAM project when the Type Certificate is issued or, if there is residual work to complete, prior to fleet introduction. When the Project Manager is satisfied that all of the activities required to satisfy the type certification activity have been completed, he will advise closure of the project.

Appendix B - Cost Recovery Principles, Criteria and Procedures on Aircraft Certification Projects for Maintenance and Manufacturing

  1. Principles:
      

    1. Charges are levied where the applicant is beneficiary of services

    2. Charges are not levied where Transport Canada is beneficiary of services

    3. Charges are not levied for Safety and Standards related items

    4. Charges are not levied for regulatory to regulatory discussions - i.e. product specific Memorandum of understanding (MOU)

    5. Time based charges are not levied where fixed fees are being paid for the specified activity

  1. Who Charge:
      

    1. Inspectors working directly on type certification projects

    2. Supervisor's working as Inspectors/Specialists on type certification projects

  1. Who Does Not Charge:
      

    1. Chiefs

    2. Administrative personnel

  1. What Activities are Chargeable:
      

    1. Activities in support of the issuance of a type certificate for a domestic product:
        

      1. Type Board Meetings

      2. Design Review Meetings

      3. Issue Papers

      4. Conformity inspections pertinent to developmental aircraft and test articles - specific AARDE     Project Manager requests associated with type certification

      5. Conditions for first test flight involving Transport Canada personnel

      6. Test witnessing

      7. Review initial Instructions for Continuing Airworthiness as defined in the appropriate Standard & associated Appendix in the CARS, including MRB activities, and Maintenance, Installation and Overhaul Manual approvals (as applicable)

      8. Initial MMEL development and approval

      9. Compliance Program
         

    1. Activities in support of the issuance of a type certificate for a foreign product, including but not limited to:
        

      1. Initial Briefing from the Applicant

      2. Review of domestic MMEL and development of Transport Canada Supplement to the MMEL

      3. Review initial Instructions for Continuing Airworthiness - Maintenance Review Board activities (as determined on case by case basis)

      4. On-Site Review of the Product, including activities leading to and subsequent to, such as preparatory work and action items

      5. Findings - Issue Papers, Concern Papers

  1. What Activities are Not Chargeable:
      

    1. Product specific MOU's and working arrangements - Regulatory to Regulatory Authority

    2. Briefings from potential applicants for information purposes only

    3. Review of Foreign Regulatory Airworthiness System

    4. Acquisition of knowledge by TC personnel on technical matters (e.g. fly-by-wire)

    5. Duplication of services/personnel involved in on-the-job training of individuals, such as during company visits

    6. Development of Standards and Special Conditions

    7. Management and Administration Task Guidance:
        

      1. Financial - cost recovery estimates, analysis, etc.

      2. General Administration - mail sorting, logging, filing, boardroom bookings, travel arrangement, etc.

      3. Personnel Administration - overtime, travel, training forms, etc.

      4. General applicant inquiries unrelated to active projects

      5. Meetings not associated with operational tasks

      6. Personnel - staffing, staff relations, classification, pay and benefits, training administration, appraisals.

      7. Planning - Treasury Board submissions, operational plan, working plan, goals.

      8. Material Management - inventories, equipment procurement, security, accommodation/facilities.
          
        Note: Due to ever changing administrative roles, functions and responsibilities within Civil Aviation, the above listing of activities is not to be considered all inclusive, and is therefore provided for example purposes only.

  1. Procedures and Responsibilities:
     
    Opening a project in SCRAM is the responsibility of the Aircraft Certification Project Manager in consultation with Chief, Project Management and should account for the criteria listed. Project Team should be identified and informed that they have been assigned to the team.
     
    The Project Manager will de-activate (close) the SCRAM project when the type certificate is issued or, if there is residual work to complete, prior to fleet introduction. When the Project Manager is satisfied that all of the activities required to satisfy the type certification activity have been completed he will advise closure of the project.

Appendix C - SCRAM Notification Form for Maintenance & Manufacturing Employees

SCRAM Notification For Maintenance & Manufacturing Employees

To provide employees with access to the SCRAM Application and training on cost recovery, the following information is to be forwarded to AARDB and AARDE.

Last Name

  

First Name

  

Initial

  

Division

  

Notes

(i.e. New Employee, Employee Departure)

  

 

 

Start Date / End Date

  

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