Quality Assurance and Internal Review

Indirect Cost Rate Submission and Approval

In State Engineering Consultants

In-state engineering consultants who anticipate performing services for the North Dakota Department of Transportation (NDDOT) are required to submit an indirect cost rate for approval. Submitted indirect cost rates must comply with cost principles contained in the Federal Acquisition Regulation, 48 CFR 31 (FAR). Engineering consultants should have a current approved indirect cost rate no older than 12 months from the close of the firm’s fiscal year to ensure rates reflect the most recent costs.

Engineering consultants are required to submit an audited indirect cost rate conducted by an independent Certified Public Accountant (CPA). Audits of indirect cost rates should be conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS) and the AASHTO Uniform Audit & Accounting Guide.

In the absence of an audited FAR compliant indirect cost rate, engineering firms may request to utilize a temporary indirect cost rate. Inquiries related to the use of a temporary indirect cost rate should be directed to Steve Cunningham, Consulting Administrative Services.

Engineering consultants must submit the following documents for review and approval to the NDDOT:

  • Indirect Cost Rate Audit Report
  • Financial Statement Audit Report
  • AASHTO Internal Control Questionnaire (Appendix B of the AASHTO Uniform Audit & Accounting Guide)
  • AASHTO Review Program for CPA Audits of Consulting Engineers’ Indirect Cost Rates (Appendix A of the AASHTO Uniform Audit & Accounting Guide)
    • The review program must be accurately and fully completed, including the comment and workpaper number reference sections of the program. Ensuring that workpapers are accurately referenced is the responsibility of the CPA and the engineering consultant.
  • Management Representation Letter

Engineering consultants are encouraged to submit documentation electronically via the State of North Dakota’s Secure File Transfer System (SFTS). Please contact Jody Isaak, Quality Assurance and Internal Review Division to facilitate the uploading of required documents. Engineering consultants may submit hardcopy documentation to the Quality Assurance and Internal Review Division, 608 E Boulevard Ave, Bismarck ND 58505.

All submitted indirect cost rates will be subject to the NDDOT’s risk assessment process. Upon completion of this risk assessment process, the NDDOT may accept the indirect cost rate without any further review, may perform a limited review of the indirect cost rate, or may perform a cognizant review of the indirect cost rate.  

If the NDDOT opts to perform a limited review of the indirect cost rate or a cognizant review of the indirect cost rate the consultant engineer and the CPA firm will be notified as additional documentation will be required. Limited reviews and cognizant reviews often involve the review of the engineering consultants accounting records and the CPA’s workpapers.

If the NDDOT opts to accept the indirect cost rate without any further review or conducts a limited review an acceptance letter will be issued to the engineering consultant. The NDDOT retains the right to conduct a cognizant audit of approved rates or adjust them based upon receipt of additional information after the date of the acceptance letter. If the NDDOT opts to conduct a cognizant review of the indirect cost rate, a cognizant approval letter will be issued to the engineering consultant.

Facilities Capital Cost of Money (FCCM) will be approved separately from the indirect cost rate when calculated on the indirect cost rate report. Fixed fees cannot be calculated on the FCCM according to FAR paragraph 15.404-4(c)(3). FCCM is to be calculated on direct labor only and listed separately on the cost summary sheet.

23 CFR part 172 was revised effective June 22, 2015, requiring consulting engineers to certify that the final indirect cost rate is allowable in accordance with the Federal cost principles. The NDDOT will therefore require consulting engineers to submit a certification form when any contracts are signed.

Out of State Engineering Consultants

Out of state engineering consultants who anticipate performing services for the North Dakota Department of Transportation (NDDOT) are required to submit an acceptance or cognizant letter from a Department of Transportation from the state where the engineering consultant is headquartered or from a state where the engineering consultant actively engages in performing services.

23 CFR part 172 was revised effective June 22, 2015, requiring consulting engineers to certify that the final indirect cost rate is allowable in accordance with the Federal cost principles. The NDDOT will therefore require consulting engineers to submit a certification form when any contracts are signed.

Any questions regarding indirect cost rate audits can be addressed to Jody Isaak, Quality Assurance and Internal Review Division.

Questions regarding contract submittals and award procedures can be sent to Steve Cunningham, Consulting Administrative Services.

 

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