contract simplification workgroup, cdph indirect cost rate october 2013

Contract Simplification Workgroup, CDPH

Indirect Cost Rate

October 2013


• What is an indirect cost?• What is an indirect cost rate plan?• What is our current policy for the ICR?• What are the problems with our current ICR policy?• Contract Simplification Workgroup• Who is on the Contract Simplification Workgroup?• CHEAC ICR Proposal• CDPH / CHEAC / CCLHO Joint Proposal• New ICR Method• ICR Documents

Presentation Contents

1


An Indirect Cost

• Costs incurred for common/joint objectives• Cannot be specifically identified with one

particular project• Examples: executive, administrative (i.e. legal,

audits, accounting, data processing), and janitorial costs.

• “Other costs” that benefit more than one cost objective or organizational unit.

• Costs are accumulated and distributed through a cost allocation process.

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Indirect Cost Rate (ICR)

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• ICR = ratio between total indirect expenses and the direct cost base

• Total costs from a prior fiscal year are split between direct costs (i.e. those costs specific to that program or project) and indirect costs (i.e. “overhead” costs not specifically tied to that program or project)

• Once the indirect cost pools are pooled, they are divided by the direct costs to generate an indirect cost rate

• Indirect costs ÷ modified total direct costs = ICR


Current CDPH ICR Policy

CPSS Bulletin 10-08: Established ‘maximum’ rates

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15% of Personnel Costs: Unless documentation provided and higher ICR negotiated

25% of Personnel Cost• Other contracts:

• Local health department (LHD) contracts:


Current CDPH ICR Policy

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• Restrictive - LHD ICR is low & does not cover costs• Inequitable - Other contractors allowed higher ICR than

LHDs• Inconsistent - ICRs vary significantly – 0% to 35%. Different

ICRs within an LHJ – depends on Program or Contract Analyst

• High Workload - Negotiating ICRs time-consuming and laborious

• Unclear - No clarity/transparency on ICR determination. No opportunity for ICR updates based on actual costs


Contract Simplification Workgroup

• Since 2009: Work on contract-related issues identified by CCLHO and CHEAC

• January 2012: CDPH Strategic Map developed• Priority - Strengthen / Streamline Resource

Acquisition, Management, & Deployment • Contract Simplification Workgroup• Identify ways to streamline and strengthen the

contracting process

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Contract Simplification Workgroup Members

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o Tim Bow, Chief, Program Support Brancho Jonelle Chaves, Assistant Division Chief, Division of Communicable Disease Controlo Susan Fanelli, Deputy Director, Emergency Preparedness Officeo Schenelle Flores, Branch Chief, Office of AIDSo Jean Iacino, Acting Chief, Office of Internal Audits & Office of Civil Rightso Drew Johnson, Acting Deputy Director, Center for Chronic Disease Prevention and

Health Promotiono Daniel Kim, Chief Deputy Director, Operationso Roberta Lawson, California Conference of Local Health Officers (CCLHO)o Alan Lum, Deputy Director, Administrationo Chris Nelson, Assistant Deputy Director, Center for Family Healtho April Roeseler, Section Chief, Tobacco Controlo Shelley Stankeivicz, Title V Fiscal & Program Oversight Manager, Maternal Child

Adolescent Healtho Will Young, Audit Manager, Office of Internal Audits


CHEAC ICR Proposal

July 2012: CHEAC submitted an ICR proposal to CDPH

LHD developed method - either:1. State Controller / County Auditor approved or2. 15% of total costs or3. 25% of personnel costs or4. Dictated by federal restrictions

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CDPH/CHEAC/CCLHOJoint Proposal

Working Together• CDPH Contract Simplification Workgroup• CHEAC Representatives• CCLHO Representatives

Criteria • Compliance Risk - No increased audit risk. OMB A-87

compliant.• Equity / Consistency - Improved among LHDs and CDPH

programs. • Administrative Burden / Transparency - Easy to

understand / execute for LHDs & CDPH.11


New CDPH ICR Method

Contract Bulletin 13-07

• “Indirect Rates for Contracts with LHDs”

• Effective July 1, 2014

• Supercedes CPSS Bulletin 10-08.

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New CDPH ICR Method

• LHD submits SCO-Approved FUI (for use in) FY 13-14 Cost Allocation Plan (CAP)

• LHD will identify whether it chooses to calculate its ICR as either a percentage of (1) personnel services costs or (2) total allowable direct costs

• ICR will be capped at no more than 25% of personnel services costs or 15% of total allowable direct costs

• Only known exception are HRSA programs that have an Admin cap for HIV Care Program and Minority AIDS Initiative (both 10%) and HOPWA (7%)

• Verified by County Auditor-Controller

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CDPH New ICR Method Documents:

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• LHD Cover Sheet / Certification Form

• LHD Indirect Cost Sheet

• Contract Bulletin 13-07

• Frequently Asked Questions: ICR Method

ICR Documents