Overview
This section outlines the primary objectives for establishing both final indirect cost rates and interim billing rates. It focuses on ensuring administrative efficiency, consistency across government agencies, and the timely financial settlement of cost-reimbursement contracts.
Key Rules
- Final Indirect Cost Rates: Must be established to ensure a uniform approach when a contractor works with multiple agencies or on multiple contracts.
- Administrative Efficiency: The process is designed to promote economy of administration and facilitate the prompt closing of cost-reimbursement contracts.
- Billing Rates: These are used as an interim reimbursement method based on estimated costs.
- Rate Adjustments: Billing rates are temporary and subject to adjustment during the period of performance and upon the final determination of actual indirect cost rates.
Practical Implications
- Contractors benefit from a "single face to the government," as established final rates prevent conflicting overhead determinations by different federal agencies.
- Billing rates provide essential cash flow to contractors for indirect expenses, though they require diligent monitoring to avoid significant overpayments or underpayments before the final audit.