How do you calculate overhead rates for an entity with a single federal contract for a start-up, state-created regional authority?
What should we use as our base for allocation of indirect costs which we estimate to be 90% allocated to the federal contract and 10% to perform our G & A for non-federal activities. We have no full time employees; all personnel are consultant or contract staff. A. Our advice to a newly formed organization like yours would be to work with your contracting agency counterpart (the State DOT in this case), and have their cognizant auditor review your proposed indirect cost methodology, or actually advise you as to methods they would find acceptable. This audit office should be the same one that will review your actual costs upon completion of the project. The objective of this review would be to negotiate a rather definitive “advance agreement” in your contract or grant with the State DOT that spells out the agreed upon methodology for charging both direct and indirect costs. If you go into this contract or grant without an up-front advance agreement on costing methods acceptable to both
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