Authority/Reference(s) Uniform Grant Guidance 75.30675.41475.416
Revision Date September 7, 2018

Policy

Approved Payment Type information must be included in each contract. Contract staff must confirm goods and services procured through competitive or open enrollment processes include payment information as outlined in the procurement documents. Specific information required by payment type is detailed below.

Rate Based

When payments to be made under a contract are based on a rate that is set by a formal rate-setting process by DFPS or another state agency.

A contract with a Rate Based payment method must, at a minimum, include:

  • What constitutes a billable unit of the service;
  • The billable amount that DFPS will pay the provider for each unit of service delivered;
  • Details of any unique characteristics that affect the rate (e.g., hospitalization, runaway status, etc.);
  • Conditions for payment; and
  • If applicable, IMPACT service code, category of service and unit type information.

Fee For Service

When payments to be made under a contract are based on an agreed upon and approved Fee For Service(s) delivered.

A contract with a Fee For Service payment method must, at a minimum, include:

  • What constitutes a billable service, or unit of service;
  • The billable amount that DFPS will pay the provider for the service(s) delivered;
  • Conditions for payment; and
  • If applicable, IMPACT service codes and category of service.

Cost Reimbursement

When payments to be made under a contract are done as reimbursement for only allowable incurred costs within the scope of an approved budget.

A contract with a Cost Reimbursement payment method must, at a minimum, include:

  • The approved budget including the total budget amount;
  • If the option to amend the cost or deliverables is available;
  • Protocol and conditions for requesting budget transfers; 
  • The delivery and the time frames in which the services will be provided.
  • Conditions for payment (e.g. cost reimbursement contracts are paid only after expenditures have been incurred);
  • Any required procedures for maintaining adequate supporting documentation to validate costs;
  • Cost allocation and indirect cost provisions; and
  • Requirements for match, if applicable.

Match

Grants awarded by the federal government often require the recipient (e.g DFPS) to supplement resources to support functions funded by the grant. To meet this requirement, DFPS may require a grant “match” from Subrecipients. Depending on the conditions set forth in the federal award, this match may either be cash or in-kind. If matching funds are required, the contract must, at a minimum, include:

  • All matching funds requirements;
  • How matching funds are to be documented and reported; and
  • If the option to amend any matching funds conditions is available. 

Cost Allocation

Cost allocation is a means of distributing funds to specific functions, activities, or programs. Cost allocation is required when the costs will benefit more than one contract, program, or funding source.  If cost allocation is necessary, contractors must:

  • Use a reasonable method of allocation approved by contract staff; and
  • Be consistent in their use of allocation methods across all program areas and business entities in which the contractor has an interest.

Allocation methods that do not reasonably reflect the actual business operations and resources expended for each unique business entity should not be accepted.

Indirect Cost Rate

An indirect cost is the proportion of indirect costs that each contract should bear. An indirect cost rate is the ratio (expressed as a percentage) of the indirect costs to a direct cost base. Indirect costs can never be included as direct costs within the budget. DFPS allows contractors to bill indirect costs when the contractor has established an indirect cost rate that meets one of the following criteria:

  • Approved by a federal cognizant agency as one method of ensuring proper allocation of indirect costs; or
  • In the absence of a federally approved rate, an entity may request the federal de minimis rate of ten percent.

The de minimis rate of ten percent can be charged when:

  • A non-federal entity receives a federal award after December 26, 2014; and,
  • The award references the UGG; and,
  • The non-federal entity has never negotiated an indirect cost rate with a federal agency.

Fixed Price

Fixed Price contract refers to contracts with a set agreed upon payment amount for the delivery of goods and/or services. 

A fixed price contract must, at a minimum, include:

  • The fixed price for the services and/or goods;
  • The option to amend the cost or deliverables, if available;
  • Defined timeline (including all deadlines); and
  • Conditions for payment (e.g. milestones reached, receipt of deliverable