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INDIRECT COST RATES

Maintaining effective indirect cost rate management

 

WHAT IS AN INDIRECT COST RATE?

Simply put.....it's a rate, expressed as a percentage, used to recover overhead and administrative costs.

​Five Common Rate Structures:

  • Fringe and F&A Rate

  • Modified Fringe and F&A Rate

  • Overhead Rate

  • Overhead and G&A Rate

  • Fringe, Overhead and G&A Rate

WHY YOU NEED ONE

Your funding may require one and it's a good business practice.

  • Some agencies and funding types, require you to have a negotiated rate.  For example if you have FAR clause 52.216-7 in your award, you need one and they are subject to audit.

  • If not required to negotiate a rate, you should develop one so that you know all of your costs.

  • It helps you prepare better budgets and manage cash flow.

THE #1 MISTAKE

Using a rate that is too low, resulting in insolvency.

  • It is critical to develop an appropriate rate for your particular business.

  • Continuously monitor, understand and manage your rates, so that you can make informed strategic decisions.

I CAN HELP

I work with my clients through the entire indirect cost rate cycle; from development through audit and closeout.

  • Develop indirect rate for your particular business. 

  • Negotiate rates with the Federal Agency on your behalf.

  • Establish provisional rates.

  • Monitor your actual rates, comparing budgeted and provisional.

  • Rate planning and analysis for strategic decisions.

  • Final rate application and closeout.

  • Prepare incurred cost submissions/ICE.  (Due 180 days after your fiscal year end)