Today the Human Services Department updated the department policy regarding indirect costs. Indirect costs refers to the indirect rate for subcontractors. This policy places a fifteen percent (15%) cap on reimbursement for agency indirect costs. The 15% indirect total is calculated by first dividing the contract total dollars by 1.15, which results in the direct total. Second, multiply 15% indirect rate on the direct total which yields the indirect total for a contract.
Total Contracts Budget / 1.15 = Direct Total
15% indirect rate X Direct Total = Indirect Total
To establish this policy the department conducted research on indirect contracting practices regionally–including the indirect cost policy at the State Auditor’s Office, City departments and other jurisdictions.
See the full policy here: HSD_Indirect_Policy FINAL.