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GCS-301Factors to Consider when Restructuring Indirect Rates
Presented byNeoSystems Corp
Jerry Falvey, IV
Vice President
April 13, 20232 ©2011 Deltek, Inc. All Rights Reserved
Project Manufacturing
Human Resources
Project Management
Financial Management
Enabling Success
Winning More Business
Reducing the Cost of Compliance
Increasing Project Visibility
Improving Cash Flow
CRM and Capture Management
Teaming Solutions
Market Intelligence
Business Performance Management
Know More
Win More
Do More
April 13, 20233 ©2011 Deltek, Inc. All Rights Reserved
Project Manufacturing
Human Resources
Financial Management
Project Management
Do More
CRM and Capture Management
Teaming Solutions
Market IntelligenceWin More
Do More
Project Execution & Management
Reporting, GRC & Compliance
Project & Corp Accounting
Time, Expense, Labor, Payroll
Business Performance Management
Know More
April 13, 20234 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Agenda
Key Concepts and Terms
GCS Mechanics
Managing Indirect Rates
April 13, 20235
Factors to Consider when Restructuring Indirect Rates
©2011 Deltek, Inc. All Rights Reserved
Defining Pools (FAR 31.203(c) - Indirect Costs)
Logical cost groupings with due consideration of reasons for incurring costs
Grouping based to permit allocation by a common basis Allocations based on benefits received by intermediate & final cost
objectives Number and composition of groupings governed by practical
considerations and should not unduly complicate allocation process Costs incurred for the same purpose and in like circumstances must
be treated consistently After determination of base – it can not be fragmented (i.e. include
allowable and unallowable cost in base)
April 13, 20236 ©2011 Deltek, Inc. All Rights Reserved
Pools
Fringe Benefits Overhead pools
Function (Eng, Mfg, etc) Business lines Locations (client/company site)
Material & Subcontracts General & Administrative
Service Centers
Facilities Computer/Network Copier Service Centers Bid and Proposal Service Centers Equipment Service Centers
Factors to Consider when Restructuring Indirect Rates
April 13, 20237 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Defining/redefining a cost structure
Maximize recovery of allowable costs Manage and control costs Competitive advantage Compliance with regulations Impact on existing cost reimbursable contracts Single vs. multiple divisions
April 13, 20238 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Defining/redefining a cost structure
Government approval of system changes should be documented in writing
CAS covered contractors need to up date disclosure statement Non CAS covered contracts need to obtain approval from their ACO Submit request at least 60 days in advance
Cost Impact Summary Detailed Cost Impact Analysis on reimbursable contracts Indirect rate budgets Pro forma Statement of Indirect Expenses
April 13, 20239 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates
Why go through approval process Consistency in bidding and accounting for award Method remain consistent for life of award Review of cost impact on other government awards
Client approval does not mean acceptance/approval of change Multiple contract administrators DCAA audit/review could identify non-compliant issues
April 13, 202310 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates GCS and Indirect Rates
Components of a pool GL Indirect cost accounts Division (99 user defined) Pool number ( 7 per division) Pool Tier (3 tiers) Base (18 options) Variance, WIP, Inter-pool and
Inter-divisional accounts Tier Settings
April 13, 202311 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates
GCS Indirect Tiers and Pool numbers Tiering - allocation of indirect costs between intermediate costs
objectives
Fringe Benefits
Service Centers
Overhead Pools
M&S Pools
General & Administrative Pool
Tier 1
Tier 2
Tier 3
April 13, 202312 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Numbering pools
Fringe (Tier 1)
Overhead (Tier 2)
M&S Pool (Tier 2)
G&A Pool (Tier 3)
Not a Smart Set up Best Practice
1
2
3
4
1 - 2
3 - 5
5- 6
7
April 13, 202313 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Tier Settings Impacting Rates
Uncheck if more than one Fringe pool
Uncheck if more than one ringe pool
Don’t double burden labor
Enter Fringe Credit Account
M&S pool settingsA – M&S pool costs
included in G/A base
B – M&S Excluded from base
April 13, 202314 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates
Tier 2 settings
Includes Fringe in pool base = lower rate
Includes Fringe on DL
in pool
Option when using hours as base
Options for burdening B&P and IR&D
Y =Full, P =Partial, N -None
M&S pool settingsA – M&S pool costs included in G/A base
B – M&S Excluded from base
April 13, 202315 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Tier 3 Settings
April 13, 202316 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Utilizing Divisions to Maximize Indirect Cost Recovery
693 Potential Pools 26 Service Centers per division System generated inter-pool entries System generated inter-divisional entries P&L visibility of indirect costs by business units/services/region
April 13, 202317 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Sample Company
Pool Corporate Engineering Manufacturing
Fringe Co-Wide Co-Wide Co-Wide
Corporate Site OH Divisional Divisional
G&A Co-Wide Co-Wide Co-Wide
Pool Corporate Engineering Manufacturing
Fringe Co-Wide Co-Wide Co-Wide
Corporate Site OH Co-Wide Co-Wide Co-Wide
G&A Co-Wide Co-Wide Co-Wide
April 13, 202318 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Inter-pool and Inter-divisional rate process
April 13, 202319 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates Process Overview
Corporate Engineering Manufacturing
Fringe
Overhead
G&A
Fringe Fringe
Overhead Overhead
G&A G&A
INTERPOOL
INTERDIVISIONAL
11
3 3
55
2
4 4 4
2 2
April 13, 202320 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates
April 13, 202321 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect Rates
April 13, 202322 ©2011 Deltek, Inc. All Rights Reserved
Factors to Consider when Restructuring Indirect RatesQuestions/Comments
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