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Contract Support Costs ( Start-up Costs ) February 5-6, 2013 Bureau of Indian Affairs National Indian Programs Training Center (NIPTC) 1011 Indian School.

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Presentation on theme: "Contract Support Costs ( Start-up Costs ) February 5-6, 2013 Bureau of Indian Affairs National Indian Programs Training Center (NIPTC) 1011 Indian School."— Presentation transcript:

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2 Contract Support Costs ( Start-up Costs ) February 5-6, 2013 Bureau of Indian Affairs National Indian Programs Training Center (NIPTC) 1011 Indian School Rd. NW., Albuquerque, NM Instructor: Ronald B. Demaray BIA Contractor - Demaray Consulting Ph. (240)

3 2 Services to Indians Arise from Treaty Obligations Authorities for Delivery of Federal Services to Indian Tribes: Snyder Act of 1921 Johnson OMalley Act of 1934 Other specific legislation… Indian Self-Determination

4 3 Indian Self-Determination and Education Assistance Act (ISDEAA) P.L P.L P.L Enacted January 4, 1975 Gave T/TOs Authority to contract with DOI and DHEW (DHHS) for direct operation of programs serving their tribal members. P.L Amendments Passed October 5, 1988 Simplified the ISD contracting process and facilitated the assumption of BIA and IHS programs by tribal governments. Title IV - DOI Self-Governance Legislation

5 4 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Broad Bi-Partisan support in Congress Response to Tribal dissatisfaction with NPRM Title I significantly Amends P.L and 1988 amendments, Intended to limit the inappropriate exercise of discretion by the DOI and HHS Limited the promulgation of regulations Implements, by statute, many of the areas that had been subjects for regulations under 1988 Amendments Model Contract – specifies terms of P.L Contracts entered into between U.S. and Indian T/TOs,

6 5 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 MAJOR REFORMS INCLUDED: Mature Contract Status Not Procurement Contracts Contract Support Costs Local Tribal Preference in Sub-Contracting Reporting Requirements Negotiable Partial Declination and Award of Portions of a Proposal Special Construction Contract Provisions Transfer of Federal Property to T/TOs Special Insurance Provisions Access to Federal Tort Claims Coverage

7 6 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Direct access to District Court for contract disputes (CDA Claims) Access to Federal sources of supply Involvement in Federal Budget Process Re-Budgeting by T/TOs without Federal approval Program redesign Model Contract Agreement Access to contract at any level of the Agency Required Negotiated Rulemaking

8 7 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Section 106(a)(1) The amount of funds provided… shall not be less than the appropriate Secretary would have other wise provided for the operation of the programs or portions thereof… Section 106(a)(2) There shall be added to the amount required by paragraph (1) contract support costs which shall consist of an amount for the reasonable costs for activities which must be carried on by a tribal organization as a contractor to ensure compliance with terms of the contract and prudent management, but which --normally are not carried on by the respective Secretary in his direct operation of the program, or --are provided by the Secretary… from resources other than those under contract.

9 8 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Section 106(a)(3) The contract support costs that are eligible for purposes of receiving funding shall include the reasonable and allowable costs of -- direct program expenses for the operation of the program, and -- any additional administrative or other expense related to overhead incurred in connection with the operation of the program except that such funding shall not duplicate any funding provided under subsection (a)(1) of this section (B) The amount of [contract support costs] may be renegotiated annually at the request of the Tribe.

10 9 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Section 106(a)(5) Start-up Costs: During the initial year that a self-determination contract is in effect the amount to be paid under paragraph (2) shall include startup costs necessary to plan, prepare for and assume operation of the program and to ensure compliance with the terms of the contract and prudent management. Section 106(a)(6) Pre-award Costs: Costs incurred before the award of the contract may not be paid under paragraph (2) if the Secretary does not receive a written notification of the nature and extent of the costs prior to the date on which such costs are incurred.

11 10 P.L Amendments P.L – 1994 Amendments Passed October 25, 1994 Section 106(c) Annual Reports Not later than May 15 th of each year, the Secretary shall prepare and submit to Congress an annual report on the implementation of this subchapter. Such report shall include: 1.The total funds provided for each program and the amount of contract support costs for each Tribe; 2.An accounting of the deficiency in funds needed to provide full CSC funding for the year in which the report is being submitted; 3.The IDC Rate and type of rate that has been negotiated for each Tribe; 4.The direct cost base and type of base for each Tribe; 5.The IDC Pool amounts and types of costs included in the IDC Pool.

12 Indian Self-Determination Fund FY-2011 Bureau Budget Book (Green Book) The Indian Self-Determination Fund was established in FY 1995 to aid an Indian tribe address the costs associated with executing or administering a new or expanded P.L agreement. Indian Affairs has provided 100 percent of one-time funding for contract support costs for new and expanded agreements during their first year of operation. The fund is a stand-alone contract support aid; it allows Indian Affairs to support new or expanding contractors without decreasing the funding for ongoing agreements by permanently transferring these funds for the new/expanded contracts the next fiscal year to the contract support line. If there are no new contracts in a fiscal year, these funds remain available for future use.

13 Appropriation – Indian Self- Determination Fund Indian Self-Determination Fund (TPA) (+$2,000,000): FY-2011 Bureau Budget Book (Green Book) The Indian Self Determination Fund (ISDF) provides tribes with one-time start up costs and contract support funds in the initial year a new program is contracted under the authority of P.L Tribes use these funds to meet administrative requirements that are mandated when contracting BIA programs for the first time, such as financial management, personnel, property, and procurement systems. These funds will be internally transferred into the main Contract Support line item in FY 2012 to follow the new contracts enacted in FY By providing stable funding to pay start-up and initial contract support costs, the primary barrier to contracting and compacting new programs is eliminated and tribes can achieve the Administrations longstanding vision of tribal self-determination.

14 13 U.S. Supreme Court Salazar v. Ramah Navajo Chapter Majority Decision – June 18, – 4 Majority Decision Covers fiscal years 1994 through 2001 for BIA References the Indian Health Service as well Held that the Government must pay each Tribes contract support costs in full. not to exceed language preserved program integrity but did not extinguish right to full CSC Provides access to the Judgment fund for claims Found that it is the Congresss problem to remedy Chief Justice Roberts sided with the minority BIA and IHS are still considering an appropriate response – Meanwhile, Tribes are submitting claims.

15 Bureau of Indian Affairs Contract Support Cost Policy National Policy Memorandum Number: NPM-SELFD-1 CONTRACT SUPPORT COST pdf ROADCASTS/Contract_Support_Policy_Appendix_A.pdf

16 Introduction: Pages of 18. Purpose: Section 1 –Provide instructional guidance on: Determining amounts of startup, direct, and indirect CSC Allocating pools of funding available for CSC Prioritizing requests for CSC funding Reporting by the BIA to Tribes & the Congress –Goals: Stabilize funding to each Tribe Expedite payment of CSC to each Tribe Avoid reducing contract amounts

17 Introduction: Pages of 18. Scope: Section 2 –Applicable to the 12 BIA Regional Offices (and the DOI - Office of Self-Governance) Policy: Section 3 –Provide for a uniform & equitable system of distributing CSC funds to new and existing P.L compacts and contracts & preserve and support each awardees right to contract under P.L Authorizing Legislation: Section 4 –Snyder Act –Indian Self-Determination & Education Assistance Act - P.L as amended

18 Introduction: Pages of 18. Roles and Responsibilities: Section 5 –Disputes Pre-award Declination Post-award Contract Disputes Act Claim –BIA CSC Workgroup Definitions (A – U): Section 6

19 Process: Pages of 18. Determining Amounts of Startup, Direct, and Indirect CSCs: Section 7 –Overview: Section 106(a)(1) …funds provided…shall not be less than the appropriate Secretary would have other wise provided… Section 106(a)(2) CSC shall consist of reasonable costs for activities to ensure compliance with terms of the contract and prudent management… Section 106(a)(3) defines CSC that is eligible for reimbursement as reasonable costs that may be direct or indirect but shall not duplicate Section 106(a)(1) funding. May be renegotiated annually at the request of the Tribe. Section 106(a)(5) and (a)(6) authorize startup and pre-award costs to be provided as a part of CSC.

20 Process: Pages of 18. Determining Amounts of Startup, Direct, and Indirect CSCs: Section 7 –Determining CSC Requirements: Startup (and pre-award) Costs: Section 7(B)(1) One time costs that are only available in the initial year of Contracting. Pre-award costs are reimbursable only if provided written notice before the costs are incurred. Direct Contract Support Costs: Section 7(B)(2) Mostly fringe benefit related; recurring and need not be re-justified; negotiable at the option of the Tribe Indirect Costs: Section 7(B)(3) Based on a current approved IDC Rate or Indirect Types of Costs – a lump sum negotiated with the Tribe

21 Process: Pages of 18. Allocating Funding Available for CSC : Section 8 –Overview – 3 Pools of Funding: Pool No. 1 – ISD Fund: Section 8(A)(1) Funds associated with new or expanded awards funded from the ISD Fund on a pro-rata basis after July 2 of each fiscal year; excess ISD funds go to Pool No. 3. Pool No. 2 – Prior Year Funding: Section 8(A)(2) Tribes should receive the same funding they had in the previous fiscal year unless over 100%. –Agency / Regions update CSC data –Withheld funds Pool No. 3 – Shortfall Funds: Section 8(A)(3) Allocated Nationally on a bottom-up basis within 180 days of apportionment; Regions may also create their own Pool No. 3 allocation from retained funds.

22 Shortfall Report: Pages of 18. Annual CSC Shortfall Report: Section 8 –Requirement comes from Section 106(c) of the ISDEAA (P.L as amended): Annual report in writing on or before May 15 of each year – the report shall include: –Total program and CSC amounts during the previous fiscal year; –Deficiency of funds needed to provide full CSC funding for the current fiscal year; –Indirect costs rate and type of rate for each tribe; –Direct cost base and type of base from which the indirect cost rate is determined; –the indirect cost pool amounts and the types of costs included in the indirect cost pools

23 Funding: Pages 13 – 14. Pool No. 1 – ISD Fund: Section 8 (A) (1) –Eligible Requests ( Breaking up and joining Consortiums?) –Timing –ISD Processing ISD funding is provided to tribes contracting or compacting new PFSAs based on a pro-rata distribution – Startup costs are funded first then remaining costs on a pro-rata basis up to the National average of CSC funding paid.

24 ISDF – Startup Costs (Includes Pre-Award Costs) Startup [Sec. 106(a)(5) & (a)(6)] –One time costs incurred either prior to or after an award to plan, prepare for, and assume the operation of a Program, Function, Service, or Activity (PFSA). –Must be reasonable and necessary and pay for activities that are not provided in the amount computed pursuant to Section 106(a)(1) or in the Awardees recurring direct or indirect contract support costs. –Do not include operational costs (recurring costs) –Pre-Award Costs are only allowable if written notification has been provided to the BIA in advance of incurring the cost. Examples –Administrative computer hardware & software –Training necessary to operate the program (Board or Tribal Council) –Systems development –Equipment & furniture (Administrative staff) –Travel to participate in contract negotiations

25 ISDF – Startup Costs (Includes Pre-Award Costs) Startup [Sec. 106(a)(5)] (Subject to paragraph 6,) …during the initial year that a self- determination contract is in effect, the amount required to be paid under paragraph (2) [Section 106(a)(2)] shall include start-up costs consisting of the reasonable costs that have been incurred or will be incurred on a one-time basis pursuant to the contract necessary (A) to plan, prepare for, and assume operation of the program, function, service, or activity that is the subject of the contract; and (B) to ensure compliance with the terms of the contract and prudent management." Pre-Award [Sec. 106(a)(6)] "Costs incurred before the initial year that a self-determination contract is in effect may not be included in the amount required to be paid under paragraph (2) [Section 106(a)(2)] if the Secretary does not receive a written notification of the nature and extent of the costs prior to the date on which such costs are incurred."

26 ISDF – Startup Costs (Includes Pre-Award Costs) Awardees are encouraged to estimate their costs accurately. Costs will not be disallowed in the event these costs otherwise found to be reasonable and necessary exceed the initial estimate. The BIA has determined that the payment of start-up costs, including reimbursement of start-up costs already incurred, is contingent on the contract being finally awarded. If funds are not available to pay these costs in the year the contract is awarded, the BIA has determined, based on appropriation language, it is currently statutorily prohibited from paying them in future years (i.e., the CSC requirement for start-up costs cannot carry over from one fiscal year to the next). If the Awardee is not paid in the year the contract is awarded, the costs are never paid. Start-up costs incurred prior to award are normally computed on the basis of actual expended costs; start-up costs to be incurred after the award date are awarded on the basis of a budget for costs submitted and negotiated with the BIA prior to final award.

27 ISDF – Startup Costs (Includes Pre-Award Costs) The BIA only becomes liable to reimburse start-up costs incurred prior to the award date when the P.L contract or compact for the contemplated PFSA is actually awarded. There is thus a risk to a tribe that costs will be incurred in preparing to operate the contract that may not be reimbursed if: –The tribe fails to notify the Awarding Official in writing of the nature and extent of the costs before they are incurred. –The tribe expends funds for activities or items that are outside the "nature" of the costs described in the pre-award letter. –The tribe cannot provide documentation of the costs. –The requested costs are not reasonable. –The P.L contract proposal for which they are incurred is not awarded. –The costs being requested have already been paid by the BIA through other means, such as another PFSA's Section 106(a)(1) amount, a Tribal Management Grant or other existing BIA grant or contract. *NOTE: Historically $2,000, Bureau-wide

28 ISDF – Startup Costs (Includes Pre-Award Costs) Awardees can reduce the risk associated with incurring start-up costs by ensuring that a pre-award letter is received by the BIA before the costs are incurred; maintaining close communication with the Regional Office regarding the reasonableness and nature of the costs being incurred; ensuring the estimated amount provided in the pre-award letter is sufficient to cover all the costs; and updating the pre-award letter as appropriate. Awardees should ensure that the description of the nature of the activities to be performed is inclusive enough to cover all potential activities needed to begin to operate the PFSA. A pre-award request letter should address the unique needs of each tribe as it contemplates what it will require in the planning, preparation, and assumption of the contract. Awardees should provide additional letters if circumstances change or additional costs are anticipated.

29 ISDF – Startup Costs (Includes Pre-Award Costs) The development of a proposal (budget and budget narrative) for start-up costs, including those incurred prior to the award, and the evaluation guidelines for each type of cost, are outlined in Appendix A of the BIA CSC Policy document. These guidelines are for the identification and evaluation of the Start-Up Costs to be incurred. Some Start-Up Cost requests will have unique circumstances that do not fit the criteria in these guidelines. In such cases, one must review the statutory intent and the BIA CSC Policy to determine if other costs will be required. In these circumstances, however, the Awardee should expect to furnish the BIA with documentation of the amounts, and reasons for the amounts, to reviewers at all levels of the BIA.

30 LINE ITEMSGENERAL GUIDELINESDOCUMENTATION STANDARDS FOR REVIEW PERSONNEL COSTS INCLUDING FRINGE BENEFITS Personnel costs are allowable for personnel to plan, prepare for, and assume operation of the program. Generally personnel costs are allowable for these activities carried out by tribal employees, such as a Tribal Administrator, planner or other employees (to the extent not already paid for with indirect costs) who assist with the planning, development and improvement of management systems, or negotiations for program assumption. Awardees must provide a budget and budget justification or a description of costs that are reasonable and necessary to plan, prepare for, and assume operation of the contract. Awardees must also provide documentation or careful estimates of the costs to be incurred. Awardees should keep careful financial records of these costs. Examples of data needed for review are: dates of service, hourly rate, estimated or actual number of hours billed, and purpose of the service. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract.

31 LINE ITEMS GENERAL GUIDELINES DOCUMENTATION STANDARDS FOR REVIEW SUPPLIES Costs for supplies are allowable to support the start-up activities only. Costs of software or supplies may be allowable provided they support the activities necessary to plan, prepare for, and assume operation of the program, or the implementation of the systems developed. Cost of supplies necessary to develop inventories have generally not been allowed. Awardees must provide a budget and budget justification or a description of costs that are reasonable and necessary to plan, prepare for, and assume operation of the contract or costs for implementation of the systems developed. Awardees must also provide documentation or careful estimates of the costs to be incurred. Awardees should keep careful financial records of these costs. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract. Some Tribal representatives feel that the cost for supplies should be allowed if the contract divides a program, the inventory is not transferred with the program, and the Tribe must build up an inventory program supplies to operate the program.

32 LINE ITEMSGENERAL GUIDELINESDOCUMENTATION STANDARDS FOR REVIEW TRAVEL Travel costs are allowable for Tribal Board Members, tribal personnel, and consultants to plan, prepare for, and assume operation of the program. This includes travel costs for staff, board members, and consultants to attend meetings and negotiations in preparation for program assumption. Travel costs may be allowable for education, training, and developmental activities for either Board Members or tribal employees, provided that such travel is directly related to the program to be contracted. Awardees must provide a budget and budget justification or a description of costs that are reasonable and necessary to plan, prepare for, and assume operation of the contract. Awardees must provide documentation of the expenditures including the name or position of the traveler, the purpose of the travel, and the costs and duration of the trip. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract.

33 LINE ITEMSGENERAL GUIDELINESDOCUMENTATION STANDARDS FOR REVIEW EQUIPMENT Cost of equipment to support the PFSA is allowable. The cost of equipment necessary to plan, prepare for, and assume the operation of a PFSA is allowable. Awardees must provide a budget and budget justification or a description of costs that are reasonable and necessary to plan, prepare for, and assume operation of the contract. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract.

34 LINE ITEMS GENERAL GUIDELINES DOCUMENTATION STANDARDS FOR REVIEW CONSULTANTS Consultant costs are allowable to plan, prepare for, and assume operation of the PFSA. Consultant costs directly related to proposal planning, preparation, contract, compact and AFA development, negotiations, board training, management systems development, etc., are allowable. Budgets and budgets justification are required in the ISD/CSC proposal, including estimates or bids from consultants for the work to be performed. Estimates should include the rate and time involved for each task to be performed. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract.

35 LINE ITEMSGENERAL GUIDELINESDOCUMENTATION STANDARDS FOR REVIEW OTHER Other costs are allowable to plan, prepare for, and assume the PFSA. Awardees may incur other costs necessary to support the activities needed to plan for and start up the contract. These costs should be documented with a detailed description of the type and quantity and unit cost of the items and the need for such costs. Budgets and budgets justification are required in the ISD/CSC proposal, including estimates of the reasonable and necessary costs to support the start-up activities. All costs must be reasonable and necessary to plan, prepare for, or assume the proposed contract. Costs may be considered duplicative if they have already been provided to an Awardee in the Section 106(a)(1) amount, the indirect cost amount, the indirect type cost amount, or paid under another BIA grant or contract.

36 ISDF – Direct Contract Support Costs Direct Contract Support Costs (DCSC) [Sec. 106(a)(3)(A)] –Costs incurred for activities that are necessary to operate a federal program under the Act and that are not contained in either the indirect cost (IDC) pool (or indirect type cost budget) or the amount computed pursuant to section 106(a)(1). –DCSC amounts are awarded on a recurring basis and need not be justified each year. –DCSC negotiated with delegated BIA representative (15% of salaries) Examples: –Unemployment taxes on direct program salaries –Workers compensation insurance on direct program salaries –Cost of retirement for converted Civil Service salaries –Facilities support costs (rent/leases, utilities, security, and maintenance); –Training required to maintain certification requirements –Insurance to the extent not already made available (life, health, disability, property, fire, and general liability)

37 ISDF – Indirect Costs Indirect Costs [Sec. 106(a)(3)(B)] (a)incurred for a common or joint purpose benefiting more than one cost objective, and (b)not readily assignable to the cost objectives specifically benefited, without effort disproportionate to the results achieved. Negotiated with the cognizant Federal Agency (generally DOI National Business Center). Examples; financial management, procurement management, property management, HR Indirect Type Costs Awardees IDC Rate is 4 or more years old Awardees without a negotiated IDC Rate. A lump sum amount may be computed (lump sum agreement negotiated)

38 ISDF – Tribal ISDF Request 106(a)(1) Program Contracted/Compacted –Identify Program –Provide Program Budget (Tribal) Indian Self-Determination Fund Request: Pre-Award Costs –Detailed costs –Copy of Pre-Award Letter Startup Costs (Line Item Budget w/Justifications) Direct Contract Support Cost Amount (15% of Salaries) Indirect Costs –Copy of most recent IDC Rate Agreement –IDC Type Cost Request

39 ISDF – ISDF Request Processing Agency / Region –Receive and Acknowledge Receipt of Tribal Request –Conduct Review / Request additional information –Preliminary negotiation (subject to Central Office Approval) –Submit Agency / Region recommendation to Central Office Central Office –Review ISDF Requests from all Regions after July 2 Contact Region / Agency if necessary –Identify available funding –Allocate ISDF against eligible requests –Communicate results to Regions for award

40 ISDF – Examples EXAMPLES

41 ISDF – Examples Wrap up Questions ???

42 Ronald B. Demaray North 50 th Avenue Phoenix, AZ Ph. (240) Self-Determination Contract Support Indirect Costs Direct Service Tribes Tribal Consultation Technical Assistance


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