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Terms And Definitions

Direct Costs - any cost which is identified specifically with a particular final cost objective (contract).
Indirect CostsFAR 31.203 defines indirect cost as follows:  An indirect cost is any cost not directly identified with a single, final cost objective, but identified with two or more final cost objectives.  It is not subject to treatment as a direct cost.  After direct costs have been determined and charged directly to the contract or other work, indirect costs are those remaining to be allocated to the several cost objectives.  An indirect cost shall not be allocated to a final cost objective if other costs incurred for the same purpose in like circumstances have been included as a direct cost of that or any other final cost objective.  
Allocable Cost - A cost, which is assignable, or chargeable to one or more cost objectives in accordance with the relative benefits received or other equitable relationships defined or agreed to between contractual parties.  
Allocation Base - The base used for determining the allocation rate for an indirect cost pool.  The result that is obtained from dividing the total of the indirect cost pool by the allocation base is the indirect cost rate for that pool.  
Bid and Proposal (B&P) Cost - The cost incurred in preparing, submitting, or supporting any bid or proposal which effort is neither sponsored by a grant, nor required in the performance of a contract.  
Billing Rate (Flexibly Priced Contracts) - An indirect rate (1) established temporarily for reimbursement of incurred indirect costs and (2) adjusted as necessary pending establishment of final indirect cost rates.  (FAR 42.701) Generally consists of loaded hourly rates for a particular contract containing direct labor, overhead, G&A and fee.  
Burdened Cost/Loaded Cost - The results of basic labor or material costs after all other direct cost, indirect cost and fee or profit has been calculated thereon.  
Cost Input - The cost, except general and administrative (G&A) expenses, which for contracting purposes is allocable to the production of goods and services during a cost accounting period. (FAR 31.001)  
Cost Objective - A function, organizational subdivision, contract, or other work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capitalized projects, etc. (FAR 31.001) 
Directly Associated Cost - Any cost which is generated solely as a result of another cost, and which would not have been incurred had the other cost not been incurred. (FAR 31.001)  
Estimating Costs - The process of forecasting a future result in terms of cost, based on information available at the time (FAR 31.001)
Expressly Unallowable Cost - A particular item or type of cost which, under the express provisions of an applicable law, regulation, or contract, is specifically named and stated to be unallowable. (FAR 31.001)  
Fringe Benefit Pool - A type of indirect cost pool that commonly is established for the purpose of accumulating employee fringe benefit costs.  This type of pool has become increasingly popular in recent years.  Common cost accumulated in such pools includes those for compensated absences, health insurance, workers compensation insurance, bonuses, retirement plans, and payroll taxes.  
Fringe Benefit Rate - An indirect cost rate which expresses the relationship between costs accumulated in a fringe pool and the related base for allocating such costs, for a given period of time expressed as a percentage.  A typical allocation base for a fringe pool is the related labor dollars.  
General and Administrative Expense (G&A) - Any management, financial and other expense which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole.  G&A expense does not include those management expenses whose benefit or casual relationship to cost objectives can be more directly measured by a base other than a cost input base representing the total activity of a business unit during a cost accounting period. (FAR 31.001)  
G&A Pool - A type of indirect cost pool that commonly is established for the purpose of accumulating G&A expenses.  G&A expenses are often distinguished from expenses included in one or more overhead pools on the basis that the G&A expenses are less directly associated with contract activities than overhead cost.  Costs typically segregated in a G&A pool include general management salaries, salaries of employees engaged in administration, finance and accounting, and a proportionate share of occupancy expenses associated with general and administrative activities. The G&A pool is also the repository for Bid and Proposal (B&P) and Independent Research and Development (IR&D) costs as well as certain other business development costs. 
G&A Rate - An indirect rate which expresses the relationship between costs accumulated in a G&A pool and the related base for allocating such costs for a given costs objective.  The base for allocating G&A expenses in determining the G&A rate usually consists of total cost input for a business unit before G&A expenses.  
Indirect Rate Ceilings - Contractual or negotiated caps on indirect rates
Overhead Pool - A type of indirect cost pool in which common costs related to one or more groups of cost objectives are accumulated. It is most commonly used for the purpose of designating pools that contain costs that are general in nature, such as indirect labor, rent, supplies, insurance, and depreciation. This pool is often used to accumulate costs that are distinct from that necessary to the overall operation of a business or G&A costs. 
Overhead Rate - An indirect rate which expresses the relationship between costs accumulated in an overhead pool and the related base for allocating such costs, for a given period of time.  A typical allocation base for an overhead pool is the related direct labor dollars
Other Direct Cost (ODC) - Those costs directly associated with the final cost objective other than direct labor. Typical items usually included under ODC costs elements are uniforms, dedicated vehicles and associated costs, pagers, cell phones, direct travel and consultants. 
Provisional Rate - An alternate term for a billing rate
Unallowable Cost - Any cost which, under the provisions of any pertinent law, regulation, or contract, cannot be included in prices, cost-reimbursements, or settlements under a Government contract to which it is allocable. (FAR 31.001)

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