Part 6, Chapter 3: Manual Exhibit 6-3-G

Standards for the Review and Approval of Contract Support Costs by the Indian Health Service

(Footnote 1/)

Section A.  Guidelines for Proposal Preparation and Cost Analysis of Tribal Requests for Contract Support Costs Funding

1. Introduction.  The Indian Health Service (IHS) has developed its contract support costs (CSC) policy with the active participation of Indian Tribes and interested Tribal representatives.  The IHS has sought to maintain an openness concerning CSC issues and has provided information, guidance, and technical assistance to Tribes in their development of CSC proposals.  The following documents are intended to clarify CSC.

   Tribes have requested that the IHS develop standards for CSC to be used in the review and approval of CSC requests.  The Office of Management and Budget (OMB) has also supported the development of CSC standards as a means of ensuring consistency in the review of Tribal CSC requests.  In order to help Tribes understand the Agency's rationale for approving or disapproving Tribal CSC requests, it has become necessary to develop a set of consistent standards.  In fiscal year (FY) 2001, the IHS initiated the process of developing standards for CSC by creating a joint Tribal/Federal workgroup and making this part of the ongoing IHS/Tribal CSC Workgroup's charge.  The IHS and Tribes revisited and updated these standards in FY 2016.  Consensus with Tribal representatives has been achieved on most of the standards in this Exhibit.  On issues that have not been resolved, the Federal position is incorporated into the document, and the tribal position, if different, is referenced.

2. Statutory Background.  See Exhibit 6-3-A.
   1. Direct CSC.  Direct CSC (DCSC) are both non-recurring and recurring.
      1. Non-recurring DCSC are those costs generally required for the contractor/compactor to begin operations when a program, function, service, and/or activity (PFSA) is first transferred.  These costs are also referred to as startup or pre-award costs.  Costs for these activities are not contained in either the indirect cost pool or the amount computed pursuant to Section 5325(a)(1).
      2. Recurring DCSC are those costs eligible pursuant to 25 U.S.C. § 5325(a)(2)-(3) that are associated directly with the ongoing operation of the PFSA.
   2. Indirect Costs.  Indirect costs (IDC) are those costs that the contractor/compactor does not treat as direct costs but rather incorporates into the indirect cost allocation plan as negotiated annually with the cognizant Federal agency.  IDC, which may be eligible for indirect CSC pursuant to 25 U.S.C. § 5325(a)(2)-(3), are:
      1. incurred for a common or joint purpose benefiting more than one cost objective, or
      2. not readily assignable to the cost objective specifically benefited without effort disproportionate to the results achieved.
   3. Negotiating Indirect-Type Costs (Footnote /2).  For contractors/compactors without negotiated IDC rates or that request to do so, IHS and the contractor/compactor will negotiate a lump-sum amount for indirect-type costs that consists of those categories of costs that normally are found in IDC pools of contractors with rates and that are consistent with the requirements of 25 U.S.C. § 5325(a)(2)-(3).  Both indirect and indirect-type costs are awarded as non-recurring, as indirect amounts must be negotiated on an annual basis.  IDC generally fall into one of the following three categories:
      1. management and administration,
      2. facilities and equipment, and
      3. general services and expenses.
3. OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awardees, 2 CFR Part 200.  OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awardees contains cost principles for State, local, and Tribal governments.  2 CFR Part 200.  The Department of Health and Human Services' implementing regulations are available at 45 CFR Part 75.  The regulations are useful as they define the allowability of costs under Federal awards by applying the following three criteria to costs: (1) allowable, (2) reasonable, and (3) allocable.  These criteria are incorporated herein and should be considered in terms of the allowability of CSC under IHS contracts and compacts.  The following applies to all ISDEAA contracts and compacts:
   1. Factors affecting allowability of costs.  Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
      1. Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
      2. Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
      3. Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity.
      4. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
      5. Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.
      6. Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally-financed program in either the current or a prior period. See also § 200.306 Cost sharing or matching paragraph (b).
      7. Be adequately documented. See also § 200.300 Statutory and national policy requirements through § 200.309 Period of performance of this part.
   2. Reasonable Costs.  A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.  The question of reasonableness is particularly important when the non-Federal entity is predominantly Federally-funded.  In determining reasonableness of a given cost, consideration must be given to:
      1. Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award.
      2. The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award.
      3. Market prices for comparable goods or services for the geographic area.
      4. Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government.
      5. Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.
   3. Allocable Costs.
      1. A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received.  This standard is met if the cost:
         1. Is incurred specifically for the Federal award;
         2. Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and
         3. Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart.
      2. All activities which benefit from the non-Federal entity's IDC (facilities and administration, or F&A), including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of IDC.
      3. Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons.  However, this prohibition would not preclude the non-Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards.
      4. Direct cost allocation principles.  If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit.  If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (3) of this section, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis.  Where the purchase of equipment or other capital asset is specifically authorized under a Federal award, the costs are assignable to the Federal award regardless of the use that may be made of the equipment or other capital asset involved when no longer needed for the purpose for which it was originally required.
      5. If the contract is subject to Cost Accounting Standards (CAS), costs must be allocated to the contract pursuant to the Cost Accounting Standards.  To the extent that CAS is applicable, the allocation of costs in accordance with CAS takes precedence over the allocation provisions in this part.
4. Conclusion.  In an effort to make CSC more understandable, the IHS is providing the following guidelines (standards) for CSC proposal development.  These are the standards that the IHS will use in reviewing Tribal CSC requests.  The guidelines are not intended to be read as regulations dictating allowable Tribal CSC.  The guidelines should be interpreted in such a way as to be consistent with the ISDEAA, its implementing regulations, and IHS CSC policy.

Section B.  Guidelines for Proposal Preparation and Cost Analysis of Tribal Requests for Pre-Award and Startup CSC Funding

Pre-award and Startup Costs:  Both pre-award and startup costs are one-time costs incurred to plan, prepare for, and assume the operation of a PFSA and that otherwise meet the definition of CSC in 25 U.S.C. §§ 5325(a)(2)-(3), (5)-(6).  Both categories are for similar types of costs, except pre-award costs are costs incurred prior to the award date of the contract, and startup costs are costs that are incurred after the award date but during the initial year of operation of the PFSA.  Neither type of cost is considered to be recurring CSC in the ongoing operation of the PFSA.

Startup and pre-award costs usually represent a total of between 20 percent to 40 percent of the entire negotiated CSC funding requirement for awardees in the first year of operation of the PFSA.  These costs are usually higher for new organizations or Tribes assuming Federal PFSA for the first time.  Because these costs are non-recurring, however, they represent a very small portion of any one year's total CSC need.  In addition, startup and pre-award costs can vary significantly from program to program depending on the existing capacity of the awardee and the size and scope of the proposed award.

Pre-award and startup costs must be reasonable and necessary and pay for activities that are not provided in the amount computed pursuant to Section 5325(a)(1) or in the recurring direct or indirect CSC.

With regard to startup costs, section 5325(a)(5) of the ISDEAA states:

[D]uring the initial year that a self-determination contract is in effect, the amount required to be paid under [Section 5325(a)(2)] shall include startup costs consisting of the reasonable costs that have been incurred or will be incurred on a one-time basis pursuant to the contract necessary- (A) to plan, prepare for, and assume operation of the program, function, service, or activity that is the subject of the contract; and (B) to ensure compliance with the terms of the contract and prudent management.

Startup costs are costs that occur after the award of the contract.

With regard to pre-award costs that occur prior to the contract/compact start date covered by the award, section 5325(a)(6) of the ISDEAA states:

Costs incurred before the initial year that a self-determination contract is in effect may not be included in the amount required to be paid under [Section 5325(a)(2)] if the Secretary does not receive a written notification of the nature and extent of the costs prior to the date on which such costs are incurred.

Pre-award costs are computed on the basis of actual expended costs (i.e., they are reimbursed).  An estimated amount for startup costs is negotiated and awarded on the basis of a budget for costs submitted and negotiated with the Agency, though the amount will be reconciled at the end of the initial 12-month period of the agreement and the awardee will certify to IHS that it has fully obligated the startup costs funding on the negotiated startup activities.

The Agency only becomes liable to reimburse the pre-award costs and estimated startup costs when the ISDEAA contract or compact for the contemplated PFSA is actually awarded.  There is a risk to the Tribe that costs will be incurred in preparing for the contract that may not be reimbursed as pre-award costs if any of the following apply:

1. The Tribe fails to notify the Agency in writing of the nature and extent of the pre-award costs before they are incurred.
2. The Tribe expends funds for activities or items that are not included in the description of the "nature" of the costs in the pre-award letter.
3. The Tribe cannot provide documentation of the costs.
4. The requested costs exceed the "extent" of the costs included in the pre-award letter or are found not to be reasonable and necessary by the Agency after they are incurred and submitted for reimbursement.
5. The ISDEAA contract proposal for which the costs are incurred is not awarded.
6. The costs being requested have been provided to a Tribe in the assumption of a service unit or other program Section 5325(a)(1) amount or have been paid under a Tribal management grant or other existing IHS grant or contract.

Tribes can reduce the risk associated with incurring pre-award costs by ensuring that a pre-award letter is received by the Agency before the costs are incurred, maintaining close communication with the Area Office regarding the reasonableness and nature of the costs being incurred, and ensuring the estimated amount provided in the pre-award letter is sufficient to cover all the costs. Tribes should ensure that the description of the nature of the activities to be performed is inclusive enough to cover all potential activities needed to begin to operate the PFSA.

Two sample pre-award letters are attached.  These can be used as templates to assist Tribes in preparing their own pre-award letters.  A pre-award letter (see sample letter No.1) should address the unique needs of each Tribe as it contemplates what it will require in the planning, preparation, and assumption of the contract.  Tribes should provide additional letters if circumstances change or additional costs are anticipated (see sample letter No. 2).

The development of a proposal for pre-award and startup costs, and the evaluation guidelines for typical types of costs, are outlined on the following pages.  The guidelines are for the development and evaluation of a proposal under normal circumstances.  Some proposals will have unique circumstances that do not fit the criteria in these guidelines.  In such cases, one must review the statutory intent and the IHS CSC Policy to determine if other costs will be allowed.  In all circumstances, however, the awardee should expect to be requested to provide thorough documentation of the amounts and justification for the amounts to reviewers at all levels of the Agency.

Section C. Guidelines for Proposal Preparation and Cost Analysis of Tribal Requests for DCSC
Funding

DCSC is one of four types of CSC.  DCSC funding covers ongoing activities that are not contained in either the amount computed pursuant to Section 5325(a)(1) or the IDC pool or an "indirect-type" cost budget.  DCSC amounts are awarded on a recurring basis based on the initial CSC proposal and negotiation.

The determination and payment of DCSC requires a proposal from the awardee.  To the extent an awardee needs assistance in preparing a proposal, IHS will provide technical assistance.  A DCSC proposal requires adequate detail and documentation for the IHS to determine if the costs requested are allowable as DCSC under Sections 5325(a)(2)-(3) and are not duplicated in the Section 5325(a)(1) amount or in the indirect CSC amounts requested.  For a DCSC proposal, this documentation normally includes the salary of the Federal employees transferred and the Federal fringe benefits paid on those salaries by fringe-benefit category.  In addition the awardee must provide the personnel budget of the tribally-operated PFSA and the detailed fringe-benefit costs of the awardee's benefit package.  The awardee must also provide justification for costs in other budget categories for which DCSC is requested.

To compute the DCSC requirement, the awardee and the IHS must negotiate the total cost to the awardee of the activities to be supported with CSC.  After this requirement is determined, the Agency will deduct any funds that may have been provided to the awardee in the Secretarial amount for this activity to avoid duplication of costs.  The amount provided in support of these PFSA included in the Secretarial amount is determined by the past expenditures of the Agency for the activities included in the DCSC that are provided in support of the PFSA to be transferred.  In cases where the expenditures of the prior year do not represent the amount the Secretary would have expended due to one-time distortions in expenditures, a multi-year average of past expenditures may be used.  In circumstances where the Agency has never operated the PFSA, such as new programs or new appropriations for expanded programs, the Agency will compute the amount the Secretary would have provided for the DCSC activities from a "profile" developed from other, similar Agency PFSA. To prepare the DCSC proposal, the awardee should request the amounts the Agency has provided in support of the PFSA to be transferred. In cases where the PFSA has not been operated by the Agency, the awardee should request the cost "profile" from the Agency to determine what the Secretarial amount would have been.

The majority of DCSC is usually composed of certain fringe benefit costs on Federal employees that are not received in the Section 5325(a)(1) amount (Footnote /3).  These costs continue to be paid by the Federal Government on employees working under an Intergovernmental Personnel Act (IPA) agreement or a Memorandum of Agreement (MOA), and DCSC for these employees are not due until the employee or position transfers to direct Tribal hire.  Awardees should carefully maintain historical data on IPA/MOA transfers.  These positions become eligible for DCSC as they become vacant and are not expected to be replaced with another IPA/MOA employee.  The awardee must submit a CSC request or renegotiate the DCSC to ensure these costs are included in the DCSC requirement.

The Agency is required to determine that amounts requested in the DCSC proposal are consistent with the requirements of 25 U.S.C. §§ 5325(a)(2)-(3).

On a national basis, based on data from the 2012 Report to Congress on Funding Needs for CSC of Self-Determination Awards (2012 Report to Congress), the total DCSC requirement averages about 7 percent of the total Section 5325(a)(1) amount under contract.  Based on the 2012 Report to Congress, DCSC represents about 22 percent of the entire negotiated CSC requirement for Tribes and Tribal organizations.  DCSC can vary significantly depending on the type of service and service delivery modality selected by the Tribe.  In general, DCSC is composed mostly of costs computed on the salaries of the directly-hired Tribal employees.  Therefore, contracts that do not have large personnel components (like Purchased/Referred Care) or contracts operated primarily with IPA/MOA employees normally require smaller amounts of DCSC when calculated as a percentage of the total award.  Fringe benefit costs continue to make up the majority of the approved DCSC requirement.

In addition to certain fringe benefit costs, the IHS has approved some other costs as DCSC.  Reasonable costs for legal fees and general liability insurance (when not included in the IDC pool) are additional examples of costs that have been found to be allowable, as these are costs that the Agency either does not pay or are paid from resources other than those under contract.

The development of a DCSC proposal and the evaluation guidelines for the typical types of costs are outlined in the following pages.  The guidelines are meant for the development and evaluation of a DCSC proposal under normal circumstances.  Some DCSC proposals will have unique circumstances that do not fit the guidelines.  In these cases, one must review the statutory intent and the IHS CSC Policy to determine if other DCSC will be required.  In these circumstances, however, the awardee should expect to be requested to provide thorough documentation of the amounts and reasons for the amounts to reviewers at all levels within the Agency.

Example of the Fringe Benefits calculation:

Section D.  Guidelines for Proposal Preparation and Cost Analysis of Tribal Requests for Indirect
CSC Funding

INDIRECT CSC.  Most Tribes and Tribal organizations have IDC rates that are negotiated with their cognizant Federal agency.  The cognizant Federal agency for most Tribes is the Interior Business Center at the Department of the Interior.  For some Tribal organizations that primarily receive awards from the Department of Health and Human Services (HHS), their cognizant Federal agency for determining an IDC rate is HHS Cost Allocation Services.  The respective addresses and phone numbers are as follows:

This document is accessible on the Internet. Tribes are encouraged to refer to 2 CFR Part 200 for guidance on IDC rates.

For assistance with indirect-type costs, please refer to the ISDEAA, the IHS CSC Policy, 2 CFR Part 200, and 45 CFR Part 75, and contact your local IHS Area Office.

Section E. Sample Letters

Sample Pre-Award Notification Letter # 1 - From Contractor/Compactor To Area Director

Dear Area Director:

Please accept this letter as notification that the ****Tribe**** will begin to incur pre-award costs necessary to plan, prepare for, and assume operation of the ****PFSA(s)****.  We anticipate providing a proposal in accordance with the Indian Self-Determination and Education Assistance Act (ISDEAA) and the associated regulations at 25 CFR Part 900 in the near future; however, we must first do some preliminary work in order to ensure a successful contracting effort.

The ****Tribe**** has reviewed the "Standards for the Review and Approval of Contract Support Costs by the Indian Health Service."  We understand that this document provides guidance concerning the typical costs Tribes might expect to incur in undertaking contracting or compacting under the ISDEAA, but we do not believe that this document limits the types of costs we might expect to incur.  Initially, we will incur costs associated with assessing the feasibility of contracting, developing the contract proposal and contract document, and negotiating the contract with the IHS.  We anticipate incurring costs for consultants, attorneys, and other professional staff to assist us.  The costs may also include the costs of special training or meetings of the governing board, travel by current Tribal staff and other costs incurred in developing the proposal and negotiating the contract award.  The Tribe may also assign staff to this project to assist with this contracting effort.

The Tribe estimates the amounts necessary to complete the tasks needed to plan, prepare for, and assume the above PFSA to be **** fifty thousand ($50,000) **** dollars.  We will monitor these costs, however, and we will notify the IHS if the costs can be expected to exceed this amount.  It is our understanding that this amount is an estimate and does not limit the extent to which our costs might ultimately be found to be reasonable and necessary to assume operation of the contract.

Please confirm receipt of this letter and notify us of the date of your receipt of this pre-award letter.  We look forward to working with the ****Area Office**** and to the successful contracting of the above PFSA(s). Thank you.

Sincerely,
****Authorized Tribal Signature****

Cc:  Headquarters, ODSCT
Headquarters, OTSG (****when compacting under Title V****)

Sample Pre-Award Notification Letter # 2 - From Contractor/Compactor To Area Director

Dear Area Director:

On ****date of initial notification**** the ****Tribe**** notified you that we would begin incurring costs associated with the assumption of ****PFSA****.  While planning and preparing that contracting effort, we realized we would need to ****improve our accounting and management systems**** in order to successfully administer the ****[additional] PFSA**** proposed.  Therefore, we now anticipate incurring additional costs for ****the acquisition of IT equipment and systems and other management systems necessary**** to support the contract.  Professional services necessary to implement these systems will also be required.  The costs may also include the costs of special training of existing Tribal staff on the new systems.  This is in addition to those costs identified in our earlier letter.

The Tribe estimates the amounts necessary for these additional costs to be **** one-hundred and twenty thousand ($120,000)**** dollars.  Additionally, our earlier letter estimated other pre-award costs at **** fifty thousand ($50,000)**** dollars; however, it appears that due to some unanticipated circumstances and the complexity of negotiations, this amount will probably be closer to **** eighty thousand ($80,000)**** dollars.  Therefore total pre-award costs are now estimated at **** two hundred thousand ($200,000)**** dollars.  As previously stated, this amount is an estimate and does not limit the extent to which our costs might ultimately be found to be reasonable and necessary to assume operation of the contract.

Please confirm receipt of this letter and notify us of the date of your receipt of this pre-award letter.  We look forward to working with the ****Area Office**** and to the successful contracting of the above PFSA.

Thank you.
****Authorized Tribal Signature****

Cc:  Headquarters, ODSCT
Headquarters, OTSG (****When compacting under Title V****)

Sample Pre-Award Acknowledgment Letter - From Area Director to Contractor/Compactor

[Insert Tribe or Tribal Organization Address]

Dear [Insert Name]:

This is to acknowledge receipt of the [Insert Tribe or Tribal Organization]'s letter, which was received on [Insert Date of Receipt], regarding its estimated pre-award costs necessary to [Describe Activity (e.g. enter into an agreement to assume additional PSFA, new PSFA, expand PSFA, etc.)] with the Indian Health Service (IHS). While we acknowledge receipt of your letter, this acknowledgement does not constitute a decision on or agreement with the estimated costs. The final amount will require negotiations, must be consistent with 25 U.S.C. § 5325(a), and is subject to an award being made by the IHS.

The [Identify IHS Area Office Point of Contact] will serve as the primary point of contact for the [Insert Tribe or Tribal Organization] during the planning process. Our staff is happy to assist and look forward to this new proposed endeavor of the [Insert Tribe or Tribal Organization].

If you have questions, please contact [Insert Point of Contact], by telephone at [Insert Telephone Number] or by e-mail at [Insert E-mail address].

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FOOTNOTES:

Footnote 1:IHS and Tribal members of the CSC Workgroup have differing interpretations of what costs are eligible to be paid as CSC under the ISDEAA.  This summarizes the differing interpretations and clarifies that any changes to language from the prior version of this Chapter or the Exhibits are not to be construed as a change in the IHS or Tribal position on this issue.  The IHS position is that the plain language of the ISDEAA makes it clear that, to be eligible for CSC funding, a cost and the underlying activity must meet the definition of CSC in 25 U.S.C. § 5325(a)(2), which requires (among other things) that the underlying activity is one that IHS does not normally carry on or provided from resources not transferred in the contract. Accordingly, under the IHS position, activities performed by a Tribe that are also activities IHS normally carries on and provides from resources transferred in the contract are not eligible for CSC funding. The IHS position is that the statute cannot be construed in any other manner and that reliance on legislative history is unnecessary given the plain meaning of the statute.  Therefore, reference to legislative history is not necessary under the IHS position, though the IHS refers to Senate Reports 100-274 and 103-374, as well as 140 Cong Rec. H11140-01, as affirming this interpretation of the statute's clear requirements. Tribal representatives' position is that the plain language of the ISDEAA, including 25 U.S.C. § 5325(a)(3), expressly defines CSC to include both funds required for administrative and other overhead expenses and "direct" type expenses of program operation, and that in the event the Secretarial amount for a particular function, activity or cost proves to be insufficient in light of a contractor's needs for prudent management of the contract, CSC funding is to be available to supplement such sums so that health services do not have to be reduced in order to pay for the insufficiency. Tribal representatives' position is that the plain meaning of this language is supported by the legislative history adding § 5325(a)(3) to the ISDEAA, see Senate Report 103-374, at 8-9; 140 Cong. Rec. 28,631 (1994). Tribal representatives also note that the ISDEAA also requires that "[e]ach provision of the [statute] and each provision of [the] Contract shall be liberally construed for the benefit of the Contractor[.]."  § 5329(c) (Model Agreement Section 1(a)(2)).

Footnote 2:  Such lump-sum agreements can also be negotiated to supplement an IDC rate where eligible costs are not included in the contractor's/compactor's IDC pool.

Footnote 3:  Tribal representatives take the position that CSC funding is due on all Federal funds used to carry out a contract/compact and that Federal funds include funds paid by Medicaid, Medicare, and other third-party payors.  The IHS position is that, to be eligible for CSC, an awardee's costs must be related to the PFSA transferred and supported directly from Federally-appropriated dollars transferred in the Section 5325(a)(1) amount.  For example, in the Agency's view, fringe benefit costs for employees supported with Medicaid, Medicare, and other third-party resources are not eligible for DCSC.

Footnote 4:  Tribal representatives take the position that direct salaries may be included in DCSC in situations where the salaries would be allowable as an indirect-type cost but the awardee has an IDC allocation plan that specifically excludes these costs from the IDC pool.  It has not, however, been the Agency's practice to allow salary costs as DCSC.

Footnote 5:  The total lump-sum amount for these indirect-type costs will include the lump-sum amount plus the amount determined by applying the IDC rate to that lump sum amount.

Footnote 6:  Tribal representatives take the position that, to the extent that Tribes and Tribal Organizations are required to pay higher salaries than IHS pays to operate the PFSA, the difference in salary should also be eligible for DCSC.  Tribal representatives take the position that Tribes and Tribal Organizations must sometimes pay higher salaries than IHS pays due to the value attributed to Federal employment, including the value attributed to Federal retirement and other associated benefit programs.

Footnote 7:  The Internal Revenue Service (IRS) has determined that Tribes and Tribal instrumentalities are not subject to Federal Unemployment Tax.  Therefore, this cost will not be allowed.

Footnote 8:  As noted in footnote 1, Tribal representatives are of the view that no category of costs is per se duplicative and unallowable as DCSC, so long as the additional amount is necessary and reasonable for the Tribe or tribal organization to prudently operate the PFSA under contract.  As also noted in footnote 1, the IHS position is that "duplication" is not the only assessment to determine whether a cost is eligible for CSC pursuant to Section 5325(a).

Footnote 9:  See footnotes 1 and 9 Above.

Footnote 10:  In the past, DCSC has included postage, communications, and printing costs in some cases.  These costs were approved in the past because the IHS centrally-managed the costs, and the funds were not transferred to Tribal contractors in the Section 5325(a)(1) amount.  These costs were then transferred to the Area Offices and should now be available for inclusion in the Section 5325(a)(1) amount.  Accordingly, these costs are no longer being approved by the IHS as DCSC, except in the rare circumstances noted in these tables. As noted in footnote 1, Tribal representatives are of the view that no category of costs is per se duplicative and unallowable as DCSC, so long as the additional amount is necessary and reasonable for the Tribe or tribal organization to prudently operate the PFSA under contract. As also noted in footnote 1, the IHS position is that "duplication" is not the only assessment to determine whether a cost is eligible for CSC pursuant to Section 5325(a).

Footnote 11:  See footnotes 1 and 9 above.

Footnote 12:  See footnote 18 above.

Footnote 13:  See footnotes 1 - 9 above.

Footnote 14:  See footnote 18 above.

Footnote 15:  See footnotes 1 - 9 above.

Footnote 16:  The IHS made available all Federal dollars supporting long-term career training costs in the Section 5325(a)(1) amount.  Federal sites provide for long-term training from within their operational budgets.  IHS takes the position that no additional CSC funds are made available for this cost, which is duplicative of the Section 5325(a)(1) amount. As noted in footnote 1, Tribal representatives are of the view that no category of costs is per se duplicative and unallowable as DCSC, so long as the additional amount is necessary and reasonable for the Tribe or tribal organization to prudently operate the PFSA under contract. As also noted in footnote 1, the IHS position is that "duplication" is not the only assessment to determine whether a cost is eligible for CSC pursuant to Section 5325(a).

Footnote 17:  See footnotes 1 - 9 above.

Footnote 18:  Tribal Representatives take the position, as indicated in the General Guidelines column for this line item, that there are circumstances in which these amounts have not been duplicated in any other funding provided to a Tribe or Tribal Organization. Therefore, upon Tribal request and justification the cost should be negotiated on a case-by-case basis.

Footnote 19:  See footnotes 1 and 9 above.