Welcome to the SECAF Webinar Series Indirect Rates From ......May 13, 2015 · Computer Strategies, a professional services organization into a COTS software product company, Unanet

Welcome to the SECAF Webinar Series

Indirect Rates – From Strategy to Transformation

Co-Chairmen:

• Jack Hughes, Principal, PHOENIX Financial & Advisory Services

and

• Shiv Krishnan, Chairman, INDUS Corporation

Fran Craig, CEO and Founder

Investing years of experience in Information Technology and software development, Frances (Fran) Craig reengineered her first company, Computer Strategies, a professional services organization into a COTS software product company, Unanet. Acquiring over 1000 customers, Unanet has achieved 20% year over year growth for the last ten years. Developing software entirely in the United States, Unanet partners with customers and focuses on their successes.

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The One Software for Projects, People and Financials

Unanet provides project-driven organizations with resource management, budgeting & forecasting, project management, timesheets, expense reports, project accounting, billing, workforce collaboration, and financials with cost pool calculations, in one integrated system. Available either as an Enterprise license (self-hosted software), or in the "Cloud" (On Demand License), Unanet helps your organization better manage project, product and services work. www.unanet.com

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Slide: 4 © 2015 | All Rights Reserved | Aronson LLC | www.aronsonllc.com | www.aronsonllc.com/blogs |

Nicole Mitchell, CPA – Partner

As a partner in Aronson LLC’s Government Contract Services Group, Nicole M. Mitchell specializes in accounting and financial issues impacting government contractors. Her expertise extends to:

• Generally Accepted Accounting Principles (GAAP) • Cost principles related to government contractors • Federal Acquisition Regulations (FAR) • Cost Accounting Standards (CAS)

Frequent guest speaker on government contracting

compliance topics

Co-author of Thompson RIA reference manual for controllers: “Doing Business with the Federal Government”

http://www.aronsonllc.com/

http://www.aronsonllc.com/blogs





Composition of Indirect Pools and Bases




Fringe

• Typical costs • FICA, FUTA, SUTA, Workers’

Compensation

• Employee insurance

• Leave

• Retirement benefits

• Other Fringe pools • SCA or Davis Bacon

• Statutory (Part-Time)

• Divisional

Fringe pool is composed of statutory payroll taxes and discretionary benefits typically found in the employee handbook. Fringe base is commonly computed as a percentage of all labor both direct and indirect.




Overhead

• Typical costs • Support labor (Project Control)

• Training

• Facilities/IT Service Center Allocation

• Recruiting

• Travel

• Other Overhead Pools • Client Site and Home Site

• Divisional

• Location Specific

Overhead pool is composed of costs that can be identified in support one or more final cost objectives. The most common base of the overhead pool is direct labor, B&P labor, and related fringe.




General and Administrative

• Typical costs • Accounting & Finance

• Contract Administration

• General Management


• Business Development

• Other G&A pools

• Segments

G&A pool is composed of indirect expenses that cannot be easily attributed to any specific contract objective but are for the general benefit of the company as a whole. There are two types of G&A base total costs input or value added (the most common value added G&A base is over total costs before B&P/IR&D and SM&H base) .




Subcontract & Material Handling

Subcontract & Material Handling pool is composed of costs that support the award and administration of subcontracts and purchase orders. The most common base of the subcontract & material handling pool is subcontract labor, subcontractor travel & ODCs, and materials.

• Typical costs • Subcontracts labor

• Accounts Payable for Subcontractors


• Travel







Where Do You Begin?

Are we anticipating any wins/losses, or re-competes in the next year? What is the probability of those wins/losses and re-competes?

Has my company had any acquisitions or asset purchases in the past year?

How will my contract mix be affected if I revise my rate structure?

Overall answers to these questions will help determine the best structure for your company




Calculating Budgeted Indirect Rates

Bottoms Up Approach • Approach is to budget costs at each cost element • Current year’s Trial Balance • Begin with Labor • Direct Costs • Assess all other indirect expenses • Ensuring no Unallowables have been included




How to Establish Budget/Billing Rates Contractor Actions

Submit Budget Indirect Rate Proposal to ACO/CO or

DCAA/Cognizant Audit Agency

Once Rates are Established Begin Billing

Audits/ Negotiations/

Formal Approvals?




How to Establish Budget/Billing Rates

Contractor Actions

Prepare an Annual Indirect

Rate Budget

Approval by Executive

Management

Establish Provisional

Indirect Rates




Contact Information

Nicole Mitchell Partner Aronson LLC 805 King Farm Boulevard, Suite 300 Rockville, MD 20850 [email protected] (301) 222-8231 Connect with me on



mailto:[email protected]

Dave Johnson, Principal Product Manager

David Johnson has over 25 years of experience creating and enhancing financial and project management software for the project-driven enterprise. At Unanet, he is responsible for product requirements management, software functional design and working with the development and services team to deliver Unanet software and services that will delight our users.

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Documents

Welcome to the SECAF Webinar Series Indirect Rates From ......May 13, 2015 · Computer Strategies, a professional services organization into a COTS software product company, Unanet