Indirect Cost Management Guide: Navigating the Sea of Overhead,
DEFENSE SYSTEMS MANAGEMENT COLL FORT BELVOIR VA
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DoD management has become increasingly concerned with broad-based increases in defense contractor indirect cost rates. Many factors have contributed to these rate increases-the major one being a significant reduction in business base for most defense contractors because of the declining defense budget. As a result, DoD has undertaken expanded efforts to strengthen the monitoring of indirect costs. It has become very important for acquisition management personnel to gain a thorough understanding of the complex and sensitive subject of indirect cost management. We have found in teaching various program management classes at the Defense Systems Management College DSMC that the subject of indirect cost or overhead is usually referred to in very unfavorable terms, is commonly misunderstood, and is thought to be virtually uncontrollable from a government program management perspective. In addition, the large number bf indirect rates that one encounters in the defense industry significantly contributes to the confusion our students experience. Our objective in writing this guide is to demystify what many of our students refer to as the sea of overhead. We have found that there is no single published source for the general audience of acquisition personnel that provides a complete overview of indirect cost management. This guide is intended to fill that void.
- Administration and Management
- Economics and Cost Analysis