Monday, June 9, 2008

Latest Indirect Cost Settlement Means Multiple IDC Rates for Tribal Governments

The latest partial settlement agreement (PSA) in the Ramah Navajo class action suit related to indirect-cost (IDC) recovery, is perhaps the most complicated IDC settlement that has yet been reached between the Department of Interior and tribal governments. The agreement allows tribes to establish separate rates for self-determination programs through the Bureau of Indian Affairs, another rate for self-determination programs with the Indian Health Service and an additional rate for other federal programs not subject to the Indian Self-Determination Act. There is also a new methodology for calculating the carry-forward (over recovery) amounts.

In order to benefit from this settlement, tribes of all sizes will need to prepare multiple indirect cost proposals. Though the process is quite complex, it is similar to a tribe having multiple rates in accordance with OMB A- 87. Ultimately, based on our initial analysis, this is more beneficial to tribes than the current method of accepting one indirect cost rate for all federal programs. This is a fairer and more equitable way of allocating overhead costs. This week we will be reviewing the settlement more closely and we will write more here on this topic, letting you know how we think this might play out for tribes.

A copy of the settlement is available here through the settlement administrator REDW. The second document on the list is PSA III.