Contractor Overhead Rates
Over the years I have seen contractor overhead rates range from 8% to over 200%. In that respect, a couple of years ago, DoD came out with an initiative that capped Academic Grants Overhead rates at 40%. With that in mind, I do not understand why this standard cannot be placed across all of the government contracts. This would force government contractors to be more leaner and lower the overall cost to the government. ...more »
Over the years I have seen contractor overhead rates range from 8% to over 200%. In that respect, a couple of years ago, DoD came out with an initiative that capped Academic Grants Overhead rates at 40%. With that in mind, I do not understand why this standard cannot be placed across all of the government contracts. This would force government contractors to be more leaner and lower the overall cost to the government. Also, this would ease the down time that is created when awaiting a Defense Contracting Audit Agency (DCAA) overhead rate audit at the beginning or end of a contract. This would speed up award times and closeout times. By speeding up closeout times, the government would spend less time tracking outstanding unexpended funds and in some case allow them to reallocate those funds to another project. By freeing up DCAA, they would be able to spend more time analyzing labor rates and perform other auditing functions to ensure no fraud, waste or abuse was happening.
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