Cost Principles for Government Affiliates Millennium Challenge Corporation

All such contracts must be procured in a manner consistent with the requirements for performance based procurement in the MCC Program Procurement Guidelines. Indirect Costs/Facilities and Administrative (F&A) – costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored award (e.g., depreciation of buildings and equipment, computing infrastructure, administrative services, utilities, and custodial services). Generally, these kinds of costs are identified, pooled, and charged against individual programs or funding sources using a rate designed to recover the costs. Both activities and transactions could be considered unallowable due to regulations put in place by the federal government or other sponsor.

• In the case of any civil or administrative proceeding, the disallowance of costs or the imposition of a monetary penalty, or an order issued by the Federal awarding agency head or delegate to the non-Federal entity to take corrective action under 10 U.S.C. 2409 or 41 U.S.C. 4712.
• Fringe benefits include, but are not limited to, the cost of vacations, sick leave, holidays, military leave, employee insurance, and supplemental unemployment benefit plans.
• Appropriate senior representatives of the Accountable Entity or another Government Affiliate may be authorized in the Fiscal Accountability Plan to facilitate select conferences, meetings, workshops, and official or ceremonial events when necessary.
• Only a nominal amount of the MCC Grant may be used per member for working meals.

Typical examples of indirect costs for many organizations may include use allowances on buildings and equipment, the costs of operating and maintaining facilities, and general and administrative expenses, such as the salaries and expenses of executive officers, personnel administration and accounting. For contracts other than those subject to paragraph of this section, https://simple-accounting.org/ the base period for allocating indirect costs shall be the contractor’s fiscal year used for financial reporting purposes in accordance with generally accepted accounting principles. The fiscal year will normally be 12 months, but a different period may be appropriate (e.g., when a change in fiscal year occurs due to a business combination or other circumstances).

H. Total Cost (200.

Excess amounts paid in the aggregate by the Federal Government under Federal awards due to a noncompliant cost accounting practice used to estimate, accumulate, or report costs must be credited or refunded, as deemed appropriate by the cognizant agency for indirect costs. Interest applicable to the excess amounts paid in the aggregate during the period of noncompliance must also be determined and collected in accordance with applicable Federal agency regulations. Some nonprofit organizations, because of their size and nature of operations, can be considered to be similar to for-profit entities for purpose of applicability of cost principles. Such nonprofit organizations must operate under Federal cost principles applicable to for-profit entities located at 48 CFR 31.2. A listing of these organizations is contained in appendix VIII to this part. Other organizations, as approved by the cognizant agency for indirect costs, may be added from time to time. In reviewing, negotiating and approving cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is applying these cost accounting principles on a consistent basis during their review and negotiation of indirect cost proposals.

Exclude Federal income taxes, whether incurred by the fund or the contractor , unless the fund holding the plan assets is tax-exempt under the provisions of 26 USC 501. However, transitions from the pay-as-you-go method to the accrual accounting method must be handled according to paragraphs through of this subsection.

Costs Consistent in Treatment

Job means a homogeneous cluster of work tasks, the completion of which serves an enduring purpose for the organization. Taken as a whole, the collection of tasks, duties, and responsibilities constitutes the assignment for one or more individuals whose work is of the same nature and is performed at the same skill/responsibility level-as opposed to a position, which is a collection of tasks assigned to a specific individual. Within a job, there may be pay categories which are dependent on the degree of supervision required by the employee while performing assigned tasks which are performed by all persons with the same job. Estimating costs means the process of forecasting a future result in terms of cost, based upon information available at the time. Actuarial valuation means the determination, as of a specified date, of the normal cost, actuarial accrued liability, actuarial value of the assets of a pension plan, and other relevant values for the pension plan.

• They arise also in instances where the contractor requires similar assurance.
• Compensation for personal services means all remuneration paid currently or accrued, in whatever form and whether paid immediately or deferred, for services rendered by employees to the contractor.
• The federally negotiated indirect rate, distribution base, and rate type for a non-Federal entity (except for the Indian tribes or tribal organizations, as defined in the Indian Self Determination, Education and Assistance Act, 25 U.S.C. 450b) must be available publicly on an OMB-designated Federal website.
• Any such advance resolutions must be binding in any subsequent settlements, audits, or investigations with respect to that grant or contract for purposes of interpretation of this part, provided, however, that this must not be construed to prevent a contractor or non-Federal entity from contesting the lawfulness of such a determination.
• The specific types of costs covered in this section shall be accorded the treatment provided herein.

If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the non-Federal entity. Post-retirement health plans refers to costs of health insurance or health services not included in a pension plan covered by paragraph of this section for retirees and their spouses, dependents, and survivors. PRHP costs may be computed using a pay-as-you-go method or an acceptable actuarial cost method in accordance with established written policies of the non-Federal entity.

Grantor Resources

Subsequent adjustments for currency increases may be allowable only when the non-Federal entity provides the Federal awarding agency with adequate source documentation from a commonly used source in effect at the time the expense was made, and to the extent that sufficient Federal funds are available. If a proceeding referred to in paragraph of this section is commenced by the Federal Government and is resolved by consent or compromise pursuant to an agreement by the non-Federal entity and the Federal Government, then the costs incurred may be allowed to the extent specifically provided in such agreement.

If the PI is not available, an individual with direct knowledge of the project (i.e., PI’s delegate or the Departmental Research Administrator) may certify on the PI’s behalf. Defense of suits brought by employees or ex-employees of the contractor under section 2 of the Major Fraud Act of1988 where the contractor was found liable or settled. Grants to educational or training institutions, including the donation of facilities or other properties, scholarships, and fellowships are considered contributions and are unallowable. Reasonable costs for the storage, transportation, protection, and disposition of property acquired or produced for the contract.

How do I Determine Cost Allocability?

Litigation costs include all filing fees, legal fees, expert witness fees, and all other costs involved in litigating claims in court or under administrative procedures. Litigation costs incident to the contract are allowable as indirect costs in accordance with these cost principles, except that costs incurred in litigation by or against the Authority are unallowable.

Direct selling efforts are those acts or actions to induce particular customers to purchase particular products or services of the contractor. Direct selling is characterized by person-to-person contact and includes such efforts as familiarizing a potential customer with the contractor’s products or services, conditions of sale, service capabilities, etc. It also includes negotiation, liaison between customer and contractor personnel, technical and consulting efforts, individual demonstrations, and any other efforts having as their purpose the application or adaptation of the contractor’s products or services for a particular customer’s use. Costs of idle capacity are costs of doing business and are a factor Guiding Cost Principles in the normal fluctuations of usage or overhead rates from period to period. Such costs are allowable provided the capacity is necessary or was originally reasonable and is not subject to reduction or elimination by subletting, renting, or sale, in accordance with sound business, economics, or security practices. Widespread idle capacity throughout an entire plant or among a group of assets having substantially the same function may be idle facilities. Costs incurred in connection with, or related to, the mischarging of costs on Government contracts are unallowable when the costs are caused by, or result from, alteration or destruction of records, or other false or improper charging or recording of costs.

Be accorded consistent treatment in not being charged more than once to an MCC Grant. A cost may not be assigned to an MCC Grant as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the MCC Grant as an indirect cost. Indirect Costs at higher education institutions are infrastructure costs of the University needed to support the programs of the institution, including research and other sponsored programs. Building depreciation, maintenance costs, the cost of electricity and heat, accounting services, personnel services, departmental administration, purchasing, and human subject administration are examples of Indirect Costs. Indirect Costs are costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. Recipients of Federal funding are required to have solid management practices for administering the award, and have accounting practices that align with cost principles. Pursuant to paragraph of this section, the reasonable costs of any action taken by the contractor at the direction or with the concurrence of the contracting officer.

Actual interest cost in lieu of the calculated imputed cost of money is unallowable. Contributions by the contractor in any oneyear that exceed the deductibility limits of the Internal Revenue Code for that year are unallowable. An ESOP is a stock bonus plan designed to invest primarily in the stock of the employer corporation. The contractor’s contributions to an Employee Stock Ownership Trust may be in the form of cash, stock, or property. This paragraph applies to DOD, NASA, and the Coast Guard for contracts awarded on or after December 31, 2011, and before June 24, 2014.