here_2_help

Acq_4_life, If I understand your situation correctly, your agency has awarded a cost-type contract to a contractor who has been determined to have an adequate accounting system. You say the contractor is performing a "commercial service" but you don't say whether the contract was awarded pursuant to Part 12 or if it contains any commercial item clauses. Putting this all together, you may have an illegal contract (cost-type commercial item procurement). Or not. But either it needs to be a full-on commercial item contract (convert to FFP or T&M, and lose any clauses inconsistent with commercial item acquisitions), OR it needs to be full-on cost-type (specify some invoicing requirements and lose any clauses that smack of commercial item acquisitions). One way or the other; not both. To help me decide which way to go, I would look at the original solicitation, contractor's proposal and bid evaluation. In the meantime, I would pay the contractor's invoice as submitted and ask your friendly audit agency to do a post-payment voucher review. (I think they might call it a booked-to-billed reconciliation.) I'm sure there's more to be said -- and others to say it. Hope this helps.

Can I just add in here that we seem to have some information missing? What we do know is that the contractor is billing the customer is exactly the same way its costs were negotiated and contracted-for, no more and no less. Now somebody is saying, after award, wait a minute, maybe we need some more detail. Do we know whether the contractor's system has any more detail? Do we know whether the system was found to be adequate for cost-type contracting? Do we know if the contractor has a Disclosure Statement and how it accounts for its costs? Nope. Seems to me we need the answers to those questions before we make any suggestions here. Sombody (me) might say, it's unfair to tell the contractor <i>after submission of the first invoice</i> the customer needs more detail. Somebody (me) might say, you didn't need that detail to find the offer fair & reasonable, and you didn't need that detail when you negotiated the price -- so what has changed here? The only thing that's changed is that you want to change the ground rules after the game has started, which will delay the contractor's payment and might cost it more in admin. costs. But I'm not saying that -- yet -- because I believe there's too much information missing. Hope this helps. NOTE: I see Vern just posted while I was reviewing this. I concur with him but will post this anyway. H2H

Hi marcfgov, The answer to your question is straightforward. It depends. Generally, you have a G&A rate where you have a business unit or segment of the organization. If you want multiple G&A rates, I would expect to see multiple segments (see CAS 403 and 410). You can have separate and unequal G&A rates for CONUS and OCONUS if you have a CONUS business unit/segment and an OCONUS business unit/segment, both reporting to a home office. (That will be three Disclosure Statements, for those who are counting-- though the Home Office won't likely have more than Parts I, VII and VIII. Hope this helps.

At the risk of coming in late to the party, I would say, contractor100, that the government likely did not get what it needed. You say "entirely made whole by the contractor's compensation" but that is not the entirety of the situation. Originally the government needed an item or service, and now receipt of that item or service will be delayed. Sure, the taxpayers aren't out of pocket any extra cash, but what about the fulfillment of the need? I concur that the final performance evaluation should take into account that the contractor didn't provide what had been contracted for -- perhaps for good and sufficient and efficient causes. But still. Just tryin' to help ....

Let me try this again. Yes, learningtheropes there are several "wrong ways" to bill the govt for COLA expenses. Here are a few of them, focused on the contractor's point of view: 1. Propose the costs one way and bill them in a different way. This is especially good in a competition where price is a significant evaluation factor, when it can be shown that your original proposed treatment resulted in a lower proposed price, but your actual billing treatment results in higher prices. If you are a CAS-covered contractor, you get bonus points for the CAS 401 noncompliance. 2. Account for costs as direct labor, and bill them as ODC. This is a great method if you are close to losing money on your hourly T&M billing rates and can shift the otherwise margin-eroding COLA costs to the Material part of the T&M billing. Highly recommended, especially if your company already has a Deferred Prosecution agreement with the DOJ and is itching to spend money on external attorneys. 3. Account for the costs as labor overhead, and bill them as ODC. This is a variant on #2, above. Has the added feature of potential allocability issues (see, e.g., CAS 418). 4. Account for the costs as ODC, and bill them as labor. This one is tricky and counter-intuitive. Assume that as an ODC, indirect burdens are minimal (maybe only G&A, perhaps a material handling burden). But as labor the costs will be absorbing fringe and labor overhead, drawing some costs away from your other fixed-price work, thus resulting in higher margins for other contracts. If the contract mix is right, you can make a lot of money using this method. Make sure to factor litigation defense costs into the business case. 5. Account for the costs as an unburdened uplift, and add indirect cost burden(s) to your billed amounts. This method involves adding a burden to the contract billings that you don't actually incur. Given the DCAA's current propensity for voucher reviews, should be considered high-risk. But hey, what the heck. No risk, no reward, right? 6. Have a CASB Disclosure Statement that tells the Government how you will be treating the costs, then treat then differently. CAS noncompliances are always good for a laugh. 7. Treat the costs one way for all your contacts but this one, which will be treated differently. Your trick will be to try to explain to the various investigators why the facts and circumstances of this particular contract merited the "special treatment." (Remember that phrase.) Again, bonus points if you are a CAS-covered contractor. 8. Have a policy that clearly tells people how the costs will be treated, but treat them differently for this contract. This of course is an internal control issue. Remember, April Stephenson testified that 69& of all LOGCAP contractors' business systems were inadequate! (Or did she say that 69% of all DCAA audit reports on LOGCAP contractors' systems were inadequate? I forget.) Anyway, that will be a good excuse for your attorneys to use in court. 9. Have the treatment expressly covered by a contract clause, but ignore it. According to the latest SIGIR report, nobody is looking hard at contractors' invoices anyway. You could get away with this one for maybe a year or two before anybody noticed. Then quickly process a credit voucher and enjoy the interest you earned on your overpayment. 10. Have a MOU or Advance Agreement with your CO regarding how the costs will be billed, but don't follow it. Your CO will likely rotate off the contract in six months anyway, to be replaced by somebody who doesn't know about the agreement. Eventually somebody will notice, but you might be retired by then. I'm sure there are plenty of other ways to bill COLA costs incorrectly. These are just the ones I came up with on the fly. I tried to provide relative comparisons to help you decide which one to use. I hope this helps. May I suggest, as Vern and others have, that you come back to this thread with some more details, more coherently articulated?

Hi Navy, I may have jumped to a conclusion as to what COLA means, but only in an effort to help out. Telling the poster to be more clear is certainly appropriate, but then there is no learning to be had by others. Anyway that's what was on my mind when I posted as I did. Carl, we have to assume the contact is silent regarding how to handle COLA increases (whatever they may be), else why ask the question. My post assumed (perhaps incorrectly) that we had to address an ambiguous situation, and was suggesting what would be helpful, in my view. I am NOT saying what you suggested I was saying. What I was saying is this: In the absence of clear agreement in the contract as to the treatment of any particular element of cost for billing purposes, a contracting officer likely will be looking to have some assurance that the cost being billed is allowable, reasonable, and allocable to the contract. There are several ways to accomplish that task. Among those are: S/he might want to look at the original proposal to see how the contractor intended that cost element to be treated. A contracting officer might wish to have the contractor produce its Disclosure Statement to document its disclosure to the Goverment (prior to award) how the cost element would be treated. If the contractor doesn't have a Disclosure Statement, one might look at existing policies and procedures to see if the current treatment is a deviation from policy. One might look at how the contractor has treated the cost element in its other contracts, to ensure consistency. See FAR 31.201-3. 31.201-3 Determining reasonableness. ( What is reasonable depends upon a variety of considerations and circumstances, including? (1) Whether it is the type of cost generally recognized as ordinary and necessary for the conduct of the contractor?s business or the contract performance; (2) Generally accepted sound business practices, arm?s-length bargaining, and Federal and State laws and regulations; (3) The contractor?s responsibilities to the Government, other customers, the owners of the business, employees, and the public at large; and (4) Any significant deviations from the contractor?s established practices.

First, let's make sure we're talking about the same thing. COLA is an adjustment to an employee's salary or hourly wage rate based on moving from one duty station to another, where the new duty station has a higher cost of living than the old one. It is not escalation on materials or subcontractor costs, and it is not a DOL wage determination increase. Next, I'm going to go ahead and non-concur with Carl's advice. In my view, the most important issue to pin-down is what does the contractor's Disclosure Statement and/or policies and procedures have to say about how it treats COLA costs? To that I would also add: how were the costs proposed? And: what has the contractor's past practice been on its other contracts? Contract type is less important to my analysis, because I believe that the proper billing treatment will follow the proper cost accounting treatment. I guarantee that COLA costs are treated differently by different contractors. Sometimes you'll find such costs in labor, because they are generally upward adjustments to direct labor costs. You might also see them in fringe benefit costs, to distinguish them from "normal" salary costs. Frequently they are found in ODC because that's the contractor's practice. There is nothing inherently wrong with any of these practices, so long as they are followed consistently by the contractor. Hope this helps.

Hi Buyerboy, I'm assuming you're in industry. In the legacy system, when you permitted the supplier to deliver late (i.e., when the promise date was later than the due date), did you not understand that, in effect, you had agreed to modify the contract? My point is that the new system seems to be forcing you to recognize a contract mod, when the legacy system permitted "unwritten mods" for a relaxed delivery date. Nothing wrong with that that I can see. Moreover, I agree that the supplier should be evaluated against the original due date, even if the delivery date is moved to the right. Hope this helps.

Guys, I think you need to read Krazy KO's posts again. This is not a matter of earned or unearned award fee. As I read it, the problem is that the Government never evaluated the contractor's performance, and never determined how much award fee had been "earned"--though apparently there is some base fee that has been paid out. Now, nearing the end of performance, Krazy KO wants to know what to do. The contractor's has suggested that it is entitled to an award fee equal to 6% of labor costs. Legal has opined that the contract should be modified from CPAF to CPFF, and Krazy KO tend to agree, since there is very little effort left to incentivize through use of an award fee. Yet another approach would be to convert the entire mess into a FFP based on actuals incurred by the contractor to date plus an estimate to complete, with profit applied to cover the contractor's performance to date plus risk on the go-forward costs. Anyway, this is not about recording an oblidation or ADA compliance, in my view. It's more about how Krazy KO should clean up the mess. Hope this helps.

Joel, you're making an argument based at least one dubious assumption. The contractor's 10% G&A is just as likely (in fact more likely) to be based on a forecasted volume of work for the current year. When the contractor put together its forecasted G&A rate last year, it assumed that this year it would have to excavate all that rock you and it estimated would be encountered. But the work never happened. Had the contractor known that fact, it would have bid a 15% G&A rate because it would have roughly the same G&A expense pool allocated over a smaller base -- since the numerator was essentially unchanged while the denominator shrank, that means (mathematically) that the rate goes up. You need to make the contractor whole, especially because you have a contract clause that envisions this circumstance and it directs the parties to reprice the work. The reality, though is that your hypothetical is not really a good analogy. In this case, the State Department ordered dramatically less (97% less) of the estimated quantities. That amount of descope is a heckuva lot closer to a T4C than it is to a variation in quantity. It's so much less that (in my mind) it calls into question the good faith of the Government's initial estimate on which the contractor based its pricing. Had the Government issued a T4C -- or a partial T4C -- there would be no question in your mind that the contractor would be made whole, right? The contractor would be reimbursed for all actual allowable costs allocated to the contract, plus TSP prep costs. If the contractor's actual G&A rate was higher than initially forecasted, it would be permitted to recover that higher G&A rate against the instant contract. Assuming a partial T4C, if the remaining non-terminated work cost more because of lost economies of scale or disruption or whatever, you would allow that higher cost, right? Even if the higher cost was partially comprised of higher indirect costs such as G&A. So what's the difference here? Regards. H2H

Joel, perhaps I'm a bit oversensitive since it's a rare day when I get to discuss cost accounting in this Forum. Anyway, the issue is simply that when the contractor does update its G&A rates -- which will be used to bid future work or to bill current work -- it cannot always recover the increased G&A that is or will be applied to its other contracts stemming from the instant contract not absorbing its expected share as the parties intended. Some of those other contracts will be FP, others will be T&M, still others will have funding ceilings. So the contractor needs to be made whole for its "losses" from too much G&A going to other contracts. That's the whole concept of unabsorbed overhead in a nutshell: you can adjust the pricing of all other affected contracts to make the contractor whole for the unplanned increased indirect costs they all absorb, or you can adjust the price of the instant contract that failed (for whatever reason) to absorb its planned share. The Courts and the contracting parties have agreed to adjust only the price of the instant contract. Sorry if I jumped on my soapbox too quickly. As I said, I tend to get excited when these concepts are discussed. (I know, I know....) H2H

I'm enjoying the discussion and learning new things, which is always good. I'm glad I posted the case here. But I need to jump in here because Joel is making several misstatements that need to be cleared up. Joel, I'm not necessarily disagreeing with your fundamental point, but you are confused in several respects. 1. For CAS-covered contractors (including construction and A/E contractors), G&A is allocated pursuant to CAS 410. That Standard mandates use of one of three allocation bases, none of which are cost of sales or percentage of sales (revenue). Use of those bases would be a CAS noncompliance. 2. Home office costs, whether called home office overhead or G&A or whathaveyou, are allocated pursuant to several CAS (e.g., 403, 410, 418) via what is usually a set of relatively complex allocations. Joel is wrong, wrong, wrong when he says that recovery of such costs is "adjusted to reflect ... past performance or projected future performance." Joel seems to be conflating forward pricing or bid rates with actual cost rates. Actual G&A is allocated based on (a) actual G&A expenses as incurred, and ( actual G&A allocation base expenses as incurred. Joel has it completely wrong when he states "The Contractor will eventually 'absorb' G&A costs, because they will often adjust future rates on past period cost of sales and/or adjust for future sales projections." Vern has it right: failure to order hours means less G&A allocation base to absorb the G&A/HOOH expenses, increasing the actual cost rate. In a cost-plus world, the contractor will seek to pass the additional G&A onto the customer, but in a fixed unit or FFP world, there is no mechanism to do so unless the VEQ clause is used. 3. G&A contains as much "fixed costs" as any indirect cost pool -- see CAS 403's definition of "residual expenses" as well as FAR 31.201-4©. 4. Again, Joel seems to create distinctions between cost pools that don't necessarily exist (e.g., G&A versus management, supervision, etc.). G&A expense benefits the business (or business segment) as a whole. Overhead benefits a portion of the business, but not its entirety. (Again, see 31.201-4 as well as the definition of G&A in CAS 410.) Basically, some costs are direct contract costs and some costs are indirect contract costs. Management and supervision can be direct or indirect, depending on the contractor's disclosed or established practices. Management and supervision can be in G&A pool(s) or in overhead pool(s) or even direct charged in certain circumstances. So Joel, though I'm not sure you were directing your question to me, I'll answer it anyway. No, you were not making (good) sense in your distinctions. I hope this helps.

Your question confuses me. The question of separate rates for the prime and subcontractor seems to be answered by 52.232-7 if the prime contract is a non-commercial item acquisition. If the prime contract is a commercial item acquisition then 52.212-4 would be included and that would seem to permit a non-commercial subcontractor to be reimbursed at the prime's commercial hourly rates (see Alternate 1 language). What am I missing?

I do not believe that the definition of "commercial item" found in 2.101 makes a distinction based on acquisition method. If I'm wrong, I'm sure I'll be corrected forthwith.

FWIW, I concur with Don's assessment. Contracts (and subcontracts) for acquisition of commercial items (as that term is defined in FAR 2.101) are exempt from CAS. Period.

The CBCA decision in Brinks/Hermes JV, CBCA 1188, 2009 WL 2351798 (July 28, 2009) was just brought to my attention. (Saw it in the latest edition of the Government Contract Costs, Pricing & Accounting Report, from which I'm paraphrasing below.) The Court held that the T&M contract's Variation in Quantity clause provided for an adjustment of the hourly billing rates based on actual amounts of labor hours ordered. The State Department ordered 3 percent of the estimated hours. The contractor claimed an increase in overhead and other indirect costs stemming from the shortfall in hours ordered. The Court reasoned that the contract's clause was "clear and unambiguous and must be given its plain and ordinary meaning. The type of costs contemplated to be adjusted ... include the indirect and overhead costs ... the unrecovered costs are directly tied to the non-performance of the labor hours ...." Perhaps I'm the only one, but I found it to be very interesting. It would not have occurred to me to claim unabsorbed overhead in that situation. I guess I never thought it through ... I always considered unabsorbed overhead in the context of a government-caused delay/stop-work order, and not in the context of a shortfall in hours ordered.

Hi brysch, I imagine you can make the prime submit a CDRL to you with a headcount list, and perhaps even make the CDRL clause a mandatory flowdown to the subcontractors at various tiers (make the headcount list an SDRL for each subcontractor). My impression, though, is that it is going to cost you quite a bit to do so. My experience with contractors of all sizes is that nobody -- none -- has a good handle on mapping their supply chain. By that I mean there is no overall picture at the prime level of all the first tier subs, then at the 1st tier level of all the second tier subs, and so on. There is no single picture of the program's supply chain. I'm not saying that nobody has ever done it, but I am saying that I've never seen it done and I've looked for it over the past few years. Why should anybody map the supply chain? When a prime awards a subcontract, it holds the subcontractor responsible for, among other things, managing the lower tier subcontractors. Rightly or wrongly, execution and compliance risk is passed downwards. This is particularly true if the subcontract type is other than flexibly priced. So if nobody has mapped out the subcontractors in a supply chain map, how are they going to give you the names of all the performing employees at every level? The answer is, they will if you make them, but they will charge you for it. Big time. Because to them, it's a non value-added task. Hope this helps.

Hi Mary D, I was hoping somebody better informed than I am would have replied to you. I'll give it a shot anyway. In order to obtain a government contract, your company needs to be determined to be a "responsible" contractor, and the FAR criteria you posted are the standards that the C.O. needs to satisfy in order to make that determination. Apparently, the RFP you received is telling you to provide sufficent information and evidence to permit the C.O. to document the file to show that your company is, indeed, "responsible". As to how to do that, there are many upon many consultants who specialize in helping potential contractors (of all sizes) write proposals that comply with RFP instructions and FAR requirements. I would be most reluctant to give you any recommendations (nor do I think the site Administrator would appreciate me doing so). I will simply suggest you search the internet using such keywords as "proposal writer", "proposal preparation", "proposal consultant" -- and etc. Hope this helps.

Vern and Navy -- I sit corrected, which is the usual state of affairs for me when quoting FAR with Vern. Please accept my apologies, no offense meant. H2H

AAC, To add to what Vern said, I would expect your proposal to conform to the format and requirements of Table 15-2, found in FAR 15.408. The Table is entitled "Instructions for Submitting Cost/Price Proposals when Cost or Pricing Data are Required". If your proposal reasonably conforms to the requirements of the Table (and to any other proposal instructions you received) then you and your CO should be ready to negotiate a price, upon which you would execute a CCPD. As a nit, I think Vern mistyped the FAR citation because I cannot find the quoted language at 15.406-2(a). However, at 15.403-4( I found the following: Hope this helps.

Thanks, dwgerard. I'm not a lawyer either. The ironic part is that I'm being asked about the proper accounting treatment of costs incurred ... by a lawyer. I have advised my client (the attorney) that such "promises" as were described are prohibited, and that the Government is generally prohibited from accepting such "donated" services (particulary in some sort of quid pro quo arrangement). I have cited to the GAO red book for my position(s). I have further advised my client that it may want to consider an internal investigation and possible self-reporting of the matter to the appropriate IG. As for the treatment of the costs, I have advised my client that there as almost certainly no contract, and thus these are not direct contract costs, making them indirect costs. Whether allowable or unallowable will depend on the outcome of the client's internal investigation and whether such costs may be tainted by the nature of the transaction. That was about as helpful as I felt I could be, given the legal implications. Thanks again!

I apologize in advance for not having all the facts, but the following is all I know at this point. My client, a service provider, was asked by (apparently) non-authorized Government employees to provide services to start up a Federal project that would involve hosting the public. In return for its services provided on a gratis basis, the entity was "promised" a contract for operations/maintenance of the public hosting function after start up. Surprising no one on this forum, the entity never received any award, and now it is stuck with some costs it incurred, and has asked me for accounting advice as to how to recoup such costs. My first thought is that there is no way a Government employee could "promise" my client any contract. My second thought is that there is now way such a "quid pro quo" agreement would stand up in court. My client should have known better, period. Nonetheless, the Government received benefit from the services provided, and my client incurred some costs. I'm thinking that the costs might be classified as marketing/selling expenses and recovered via G&A (in the indirect rates charged to its other Government clients). However, I'm troubled by a couple of worries. (1) Could these be considered pre-contract costs and thus, a contract loss (costs incurred without being able to bill)? If so, the entity should not put the costs in G&A. (2) Could these be considered some sort of unlawful gratuity or similar attempt to influence a Government official? If so, the entity needs to make the costs unallowable and perhaps consider self-reporting the transactions to appropriate officials. This is a bit out of my league, and I'll take whatever insights you offer. Thanks!

I was in Denver doing some consulting work for a telecom company. For some reason, I couldn't sleep that night and finally gave up early in the morning, and turned on CNN. The heads were talking about a plane that had just hit the Towers, and I remember thinking to myself, "either that's the world's worst piloting, or that was a terrorist attack." Then the 2nd plane hit and we all knew right away what was going on. I was living in Herndon, VA at the time, so I called my wife, who was home with our nine month-old son, on leave from her job with a defense contractor near Langley. I was nearly 2,000 miles from home and she was worried, so she and our son drove over to a friend's house in Fairfax. I went to the client's office for our 9 AM meeting, but security had shut the building down. A couple of client employees and I went to the hotel bar, not to drink but to watch TV. The bar quickly filled up. Nobody did any work that day. At noon the phone rang -- it was one of my co-workers. We had run into each other on the plane during boarding and waved, but now she was crying and distraught and wondering if I had a rental car. That was when I learned that the airports had closed down ... indefinitely. My co-worker, a nice young lady of about 24 or 25, was going to be married in a month or two, and had just learned that her future brother-in-law was in one of the towers, and had not made it out. She needed to get home ASAP and wouldn't be flying even if the airports were open. She was hoping I had a car so we could hit the road. As it happened I did have a rather nice Bonneville, big and smooth and air-conditioned, perfect for a cross-country ride at highway speeds. So I got up early the next day, purchased some driving shoes to replace my wingtips, picked up a couple of CDs worth of driving music, and drove to her hotel. We left Denver via Highway 70 at just about noon. We arrived in Arlington VA 25 hours and 45 minutes later, having driven 1,795 miles, stopping only for gas, food, and other necessities. Going through the mid-west states, we had the cruise control set at 94 MPH. First, I figured law enforcement had better things to do at that time than issue speeding tickets. Second, if we did get pulled over, I was going to have my co-worker tell her story. I was pretty sure we were not going to get a ticket. One last note, two of my other co-workers were scheduled to be in LA on 9/12 for meetings related to the Hughes Aircraft/Boeing purchase price dispute. The client called at the last minute and postponed the meeting a week, so they changed their reservations. Had that not happened, they would have been on the airplane that hit the Pentagon.

Yelena, 1. Vern is right. The Fixed Fee is expressed as a dollar amount. Most times, contractors develop their fee estimates as a percentage of estimated total costs, but the fixed fee amount is a fixed amount of dollars. 2. I'm confused. You have a cost plus fixed fee contract, yet "The fee would be used to cover legitimate expenses that were budgeted too low ..." Is there some reason your contract doesn't permit you to recover costs in excess of the estimated costs that were negotiated 10 years ago? A cost-reimbursable contract that doesn't permit recovery of allowable costs incurred isn't tremendously different than a firm fixed-price contract, in my view. Hope this helps.

Hi Yelena, The fixed fee is generally expressed as a percentage of estimated total costs, which is the sum of direct and indirect costs less any applicable credits. A cost plus fixed fee contract has statutory limits on the fee percentage, which can be found in the FAR. I'm quite sure that 3% is below the ceiling, so no need to look it up unless you want to ask for more than 10%. You do not need to justify your fee percentage. But be aware that the Government contracting officer will be using a "structured approach" to setting his/her pre-negotiation objectives with respect to the fee percentage. If DOD is the contracting agency, the CO will be using the "weighted guidelines" approach, which utilizes a DOD form to compute the amount of profit/fee to which a contractor should be entitled. You can google the DOD form, or perhaps wait for someone to post after me who knows the form number by heart. (DD 1663? I forget.) My point is that, while you don't need to justify the percentage, you will need to negotiate it with a CO who will have some support for his/her position. So you might want to review the form/approach and do some preparation, in order to be in a position to counter the CO should you be selected for award. I have done some work with NFP contractors and many times the Government takes the position that, since the company is NFP, it should not get ANY profit/fee for its efforts. That's nonsense, of course. For one thing, you will need some fee to cover your unallowable costs that you incur. For another thing, some of that fee might go towards projects in line with your mission statement. Don't let the contracting officer tell you that NFPs aren't entitled to profit/fee, because they are. Finally, when you calculate your estimated total costs, you will need to calculate indirect cost rates based on applicable regulations. Most NFPs follow OMB Circular A-122 and get a NICRA, but some choose to follow FAR Part 32 principles. In any case, make sure you spend time figuring out your cost allocation structure and calculating the resulting indirect cost rates. Hope this helps.