Finding Text
Program Affected
66.818 Brownfields Assessment and Cleanup Cooperative Agreements
U.S. Environmental Protection Agency
Contract year: 2023
FAIN: 00A00664 / 00A00676 / 00A00909
Criteria
The federal compliance supplement allows a de minimis indirect cost rate of 10% which may be applied by organizations which do not have a negotiated indirect cost rate. However, the contract for the major federal program specifies that the Organization may only use "5% of the amount of federal funding for this cooperative agreement for administrative costs, including indirect costs."
Condition and Context
During the test of the allowable costs, indirect costs were compared to the amount allowed under the contracts. The Organization did not apply either the indirect cost rate allowed under the contract, nor did it apply the indirect cost rate to the appropriate cost basis when calculating indirect costs to charge to the federal program.
Cause and Effect
The Organization does not have internal processes to properly identify costs related to the program. As a result, indirect costs may exceed allowable thresholds.
Questioned Costs
N/A
Identification of Repeat Findings
2022-011
Recommendation
We recommend the Organization update its policies to calculate indirect costs based on the contractually allowed basis and using rates as specified in its federal contracts.
Views of Responsible Officials and Planned Corrective Actions
Management agrees with the finding. See attached Planned Corrective Actions.