If you are planning to have the U.S. Government as a client, you will need to have your accounting systems set up so you can handle their accounting requirements. Regardless of whether you are engaging in a plain vanilla contract or an SBIR grant, you will be required to negotiate fringe benefit rates, overhead rates, and general and administrative rates.
Fringe benefits rates include
- Compensated Absences, such as Vacation, Holidays, and Sick Leave;
- Medical Programs, such as Health and Dental Insurance;
- Retirement, such as the Defined Contribution Portion of your Retirement Plan and Plan Service Fees;
- Long-term Disability Coverage;
- Worker’s Compensation Coverage; and
- Employee Wellness, such as Fitness Club Membership and Other Wellness Programs
Overhead covers direct and indirect support of the employees whose time is being billed to the Government. This includes items like
- Rent (only for the space that those employees use);
- Depreciation of their furniture and equipment;
Which FAR obligations are put forward by government agencies in the contract?
In their contract Government can impose varied obligations as per established by FAR. Thus these agencies can be either demanding contract bids or can even insist upon the firm’s overhead rate in accordance with FAR. In addition, it can be the company’s schedule for audited overhead or parallel footnotes; which they will look out for.
What are the pre-requirements for FAR Overhead Rate Calculation?
While numerous firms find government contracts desirable; what they oversee is the information they are obligated to produce during FAR audits. They even miss out on having a proper report of the contract and the cost that is involved. It is thus essential for a firm to own a submissive system to manage the accounting per se. It can be time-consuming and quite a struggle in the beginning but proves beneficial for … Read More