Indirect Cost Rate Structure Consulting

The determination of how a contractor will allocate indirect costs to its contracts and the selection of what indirect rates to charge government contracts is critical to meeting cost and pricing objectives, whether they are to maximize cost recovery or to lower cost recovery to maintain price competitiveness.  The selection of how indirect costs will be allocated and what indirect rates to apply should be periodically evaluated against changing current and future contracting opportunities, competitive threats and business operations.  The cost accounting rules provide general guidelines for allocating indirect costs but also allow for significant flexibility for determining what indirect cost rates to use and what costs will be included or excluded from the indirect cost pools and bases that are selected.

Our network of consultants are uniquely qualified to help.  Our staff are former CFOs, pricing specialists, DCAA auditors and supervisors who allow us to contribute to providing the best possible indirect rate structure where we help clients decide what indirect rates to use to allocate their indirect costs such as overhead, material/subcontract handling, service centers, general and administrative, etc.  Whatever indirect cost method is selected, you can expect audit scrutiny of your indirect rates so our indirect cost rate consultants can help you be prepared to defend your selections.

Auditors will insist that contractors monitor their rates throughout the year and demonstrate they have the capability of forecasting what their indirect cost rates will be so they can change their provisional indirect cost rates when significant changes are apparent.  We help clients establish an indirect rate cost model to monitor their indirect rates and show them how to adequately monitor their rates throughout the year.

Contractors also need to demonstrate they have written policies and procedures describing how indirect costs are allocated, what rates are used, component costs of those indirect cost rates and how indirect cost rates are monitored during the year.

Our indirect cost rate structure consulting services include:

• Putting forth alternative methods for allocating indirect costs to contracts
• Selecting indirect cost rates that may best meet our clients’ cost objectives
• Suggesting methods for allocating these indirect costs to government contracts, subcontracts, task/delivery orders, grants, etc.
• Recommending what component costs will be included in each cost pool and base or relevant service centers to best meet our clients’ pricing objectives
• Conducting  sensitivity analyses to help select the best alternative indirect cost rate structure
• Establishing a justification for the selected method of allocating indirect costs.
• Preparing a written policy that auditors will consider a requirement describing your method of allocating indirect costs, indirect cost rates and how indirect cost rates are monitored throughout the year.
• Preparing changes to the CAS Disclosure Statement, if needed
• Working with DCAA and Administrative Contracting Officers to accept proposed changes