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KOIOA

A&E Technical Assistance Advisors

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Hello Everyone!

I am new to the site and the area of overhead rates. I'm conducting an assessment and cost evaluation for key personnel cited for potential short-term overseas assignment and really need some help.

Question: Should my direct labor rate for this advisor be charged to home office overhead or field office overhead rate?

My understanding is that the field office rate is appropriate however have been researching the FAR, CFR, ASSHTO, DSSR, USAID, FAM, GAAP etc. to see if there was any policy/guidance that directly links the overhead rate allocated to lenght of technical assistance assignments and have not found anything. Wanted to see if I'm just missing something....If anyone knows if/ where I might find guidance on if/if not there is a direct correlation I would surely appreaciate your help.

Thanks in advance!

KOIOA

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George is correct. We need to understand what the contractor's policies say and what its practices have been.

But no, you will not find any regulatory guidance that links length or duration of service to which overhead pool should be allocated to direct labor.

What I have seen -- and it's by no means an answer to your question -- is that a contractor's policy says that its personnel receive a full overhead burden unless (1) facilities are provided by a customer, AND (2) the personnel in question are assigned to the customer facilities for a minimum length of time (say a minimum of 90 days).

Again, notice that it's a policy and/or a disclosed/established practice that guides the assessment. The most you will find in the regulations is a requirement that the indirect cost allocated to a cost objective must have a "beneficial or causal relationship" to that cost objective. You'll also find something in FAR 31.203 that's somewhat on point, but (again) it says nothing about duration.

Hope this helps.

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George and Here_2_help

Thanks so much for your replys. Please accept my apology for the delay in getting back to the site to view for comments...been stretched beyond measure. To answer, we have not had many projects where our staff was away from our corporate office but for those we have had our standard overhead rate (home office) was always used. I realize now that we just do not have an internal policy. This is our first project where the federal govt is the end customer and frankly we're at a lost. Trying hard to come up to speed.

As far as CAS coverage -

1. The subcontract does not have any 52.230 CAS flowdowns or clauses incorporated by reference.

2. According to my understanding we are CAS exempt based on CFR 9903.201-1. We met the following three requirements (exemption only requires meeting 1 out of the 15)

-We are a small business and subcontractor

-Our subcontract is less than $7.5 million

-Subcontract is being performed entirely outside of the US

FYI: Prime contract over $50M, Subcontract is awarded on fixed hourly rates. Prime is providing temporary office space and business related transportation for our employee

Prime is stating we should bill the field rate but can/won't provide guidance/regulation/contract wording as to how or which rate should be used in thi case. The frustrating part about this is that the agreement has much to be desired. Any guidance you can provide will be tremendously appreciated.

Thanks !

KOIOA

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First things first. KOIOA if this is your first government (sub)contract and this is your first experience with calculating indirect cost rates, then you need some assistance. You admit you're at a loss; go get some help. If you are in the Mid-Atlantic area, you have a plethora of consultants available to assist you. If not, then Google (and also LinkedIn) is your friend. Get that assistance right now, before you agree to something that leads to trouble downstream.

Second, if your prime is providing "temporary office space" then your employees won't be needing the office space you provide for them. So it may well be appropriate for you to use your field rates ... or perhaps calculate a special new field rate to match the conditions. But if you are not giving their offices away to other employees, then you don't really generate any overhead cost savings, so there's an argument that the full rates are appropriate. I don't know the correct answer, nobody here knows, because we don't know all the conditions and circumstances.

Third, WIFCON is great. There are some very smart, very experienced people here. But the answers you get here are no substitute for the detailed support you would receive from an advisor. You really need to get an advisor, especially since you are being "stretched beyond measure". We can't do this for you and, quite honestly, you would be a fool to try to do it yourself. If your boss won't authorize an investment in setting up the company's first government (sub)contract correctly, then, quite honestly, your boss is a fool.

Vern did a blog post awhile ago, about "would-be clueless contractors." Meaning no disrespect, I would urge you to read it and consider if it applies to your company.

I have nothing more to say here, because anything else would not be helpful.

You need help.

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"I am new to the site and the area of overhead rates. I'm conducting an assessment and cost evaluation for key personnel cited for potential short-term overseas assignment and really need some help.

Question: Should my direct labor rate for this advisor be charged to home office overhead or field office overhead rate?"

I echo the advice to get professional assistance. I also have a question about your wording. Perhaps I am not familar enough with the issue, but to me the phrase "charged to overhead" means that the cost will be added to the overhead pools. Are you asking whether you should apply the home office overhead rate to determine the direct labor rate or whether you should apply the field office overhead rate to determine the direct labor rate? In either case, wouldn't the direct labor (including appropriate overhead) be charged as a direct cost to the subcontract rather than included in an overhead pool?

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