New Year’s Resolution #4: Do we need an intermediate allocation in our FY23 cost structure?

At a glance

• A new rate structure can be the difference between winning and losing a bid for a government contract.
• If you believe your rates make you uncompetitive, adding a facility service center, or intermediate pool, can shift facility costs away from contracts performed on the government’s site.
• Examining lopsided allocations and G&A ceilings may reveal opportunities for intermediate allocation.

The full story:

Asking a few questions can help government contractors determine whether or not adding an intermediate pool to your indirect rate structure may be beneficial.

Here are some occasions where an intermediate allocation may help you remain or improve competitiveness when bidding for government contracts.

Are your allocations becoming lopsided?

Perhaps your company wants to bid a contract performed on a government site, but you believe your rates make you uncompetitive.

Adding a Facility Service Center (Intermediate Pool) can shift facility costs away from contracts performed on the government’s site. A new rate structure can be the difference in a winning bid.

Are contracts with low G&A ceilings losing money?

Moving some General and Administrative (G&A) departments to service centers can reduce the G&A rate while more logically representing the causal-beneficial relationship of department costs.

For example, HR and IT costs residing in the G&A pool could be allocated to a pool that has a base of employees and not subcontractors. Shifting costs away from G&A can lead to increased cost recovery and promote the causal-beneficial relationship.

There is much more to learn and apply regarding intermediate pools. For more information about your unique situation, contact Aprio’s Government Contract Consulting Group.

The bottom line

There is much more to explore regarding intermediate allocations. For more guidance about your specific situation, contact Aprio’s Government Contract Consulting Services team.

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This is not a definitive list of all potential intermediate allocations. For more guidance, contact Aprio’s Government Contract Consulting Services team.