Can Your Indirect Rates Stand Up to an Audit?

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When you’re working with the Virginia Department of Transportation, or a department of transportation in any other state, the indirect rates you are charging have to comply with certain rules and regulations. According to FAR Part 31.201-2, a cost is only allowable when it is reasonable, allocable, follows generally accepted accounting principles and practices appropriate to the circumstances, and is complaint with contract terms.

What constitutes reasonable and allocable isn’t always black or white. Many of the costs that seem reasonable and allocable from the government contractor’s point of view often fall into a vast gray area that would not withstand …read more

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