|Revision Date||September 7, 2018|
In accordance with federal and state guidelines, DFPS reimburses its contractors for only costs that are allowable. The Contract Manager is responsible for determining, or securing a determination, as to whether costs are allowable.
Allowable costs must meet the following criteria:
- Be reasonable, allocable, and necessary for the performance of the contract;
- Conform to any limitations or exclusions set forth in applicable cost guidelines, principles, and definitions;
- Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization;
- Be treated consistently with other costs incurred for the same purpose in like circumstances;
- Be determined in accordance with Generally Accepted Accounting Principles (GAAP);
- Not be included as a cost or be used to meet the match requirements of any other federally-financed program in either the current or a prior period; and
- Be adequately documented.
For further guidance, Contract Managers should refer to the Uniform Grant Guidelines (UGG) at 2 CFR §200.400 for allowable (and unallowable costs).
The following considerations should be used in determining the reasonableness of a given cost:
- Any restraints or requirements imposed by generally accepted sound business practices, arms-length bargaining, federal and state laws and regulations, and terms and conditions of the contract;
- Whether the individuals concerned acted with prudence in the circumstances, considering their responsibilities to the organization; it members, employees and clients; the public at large; and the government; and
- Significant deviations from the established practices of the organization which may unjustifiably increase the contract costs.
A cost is allocable if the goods or services involved are chargeable or assignable to the contract in accordance with relative benefits received.
A cost is necessary if it is reasonable for the performance of the contract and allocable under state or federal Cost Principles. A cost is also necessary if it is of a type generally recognized as ordinary and necessary for the operation of the contractor or the proper and efficient performance of the contract.