Allocation of Overhead and General and Administrative Costs

90.10 - Allocation of Overhead and General and Administrative Costs (Rev. 26, 12-08-03) A1-1212.10, B1-4212.10 The contractor shall allocate overhead and general and administrative costs to all activities. with the exception of productivity investment (PI) activities. Incremental overhead and general and administrative costs attributable to PI projects should be eliminated from the allocation pool and included in the overhead and general and administrative cost line items of the PI project. These allocations should be based on the ratio of each activity's total costs to the sum of all activity costs. Included in costs are salaries and wages, fringe benefits, EDP Equipment, other direct costs, other costs (if applicable), and non-COB credits. It shall exclude subcontract costs from the calculation. For example, the only ongoing activities the contractor performs is for Bills/Claims Payment and Appeals. The Total Costs prior to " other adjustments" of salaries and wages, fringe benefits, EDP equipment, other direct costs, other costs, and non-COB credits equals $1,000,000 for the Bills/Claims Payment and the Subcontract cost is $100,000. The same costs are $250,000 and $25,000 for Appeals and $50,000 and $75,000 for Productivity Investments. Overhead for this period totaled $77,000 and general and administrative (G&A) costs totaled $26,000. Subcontract costs, other adjustments and forward funding are not considered in this allocation. Salaries & Wages, etc. Overhead Allocated Percent Allocated G&A Allocated Percent Allocated Sub- contracts Total Cost Bills/Claims Payment $1,000,000 $60,000 80% $20,000 80% $100,000$1,180,000 Appeals 250,000 15,000 20% 5,000 20% 25,000 295,000 Prod. Investments (PI) 50,000 2,000 0% 1,000 0% 75,000 128,000 Total Cost $1,300,000 $77,000 100% $26,000 100% $200,000$1,603,000 Less PI (50,000) Basis for Allocation 1,250,000 Less PI Overhead & G&A (2,000) (1,000) Allocable Overhead & G&A 75,000 25,000 The basis for this allocation excludes the direct PI cost and the incremental Overhead and G&A costs attributable to the PI. In this example, 80% of the non-incremental Overhead and G&A were allocated to Bills/Claims Payment because this activity comprises 80% of the cost the total allocation base for Salaries & Wages, etc. ($1,000,000/$1,250,000). In this example, 80 percent of the overhead and 80 percent of the general and administrative costs were allocated to Bills/Claims Payment because salaries & wages, etc. are that percentage of the basis. Subcontract costs, other adjustments and forward funding are not considered in this allocation.