Appendix 3 - Indirect Cost Models


DoD Indirect Cost Model

Definition of Variable

Direct Cost Variables

  • Salaries and benefits of 22 DoD PEPFAR dedicated FTEs.
  • Funding for active duty military personnel (approximately 35 individuals) who undertake occasional missions on behalf of DoD PEPFAR, who are paid with DoD funds and utilize PEPFAR travel funds.

Indirect Cost Variables

  • NHRC is charged directly by the Department of Defense for all direct labor, general overhead and indirect overhead associated with the implementation of programs. Labor is charged directly. General overhead is charged as the quotient of "total general overhead costs" divided by "total productive labor hours" incurred by all command employees (military, civil service, contractors) engaged in direct program activity. And the indirect overhead includes costs for administrative-type support attributable to a specific program within NHRC, to include departmental equipment maintenance, administrative supplies and equipment, clerical support, printing and reproduction support, and biomedical repair support. In FY07 the indirect overhead charge was $13 per productive science hour (44% labor, 21% administrative, travel and library, and 35% IT technology and base operating support). In FY08 the rate assessed was also $13 per productive science hour (43% labor, 20% administrative, travel and library, and 37% IT technology and base operating support). Per labor hour is based on the assumption of 2,080 hours per year less 11 Federal holidays, vacation and sick leave, jury duty. The final labor hours assumed by DoD and NHRC is 1,850 hours annual per employee. This $13 per productive science hour is passed directly to PEPFAR.
  • An Indirect Overhead Rate is also charged as the quotient of "total program overhead costs" divided by "total productive program labor hours" unique to each program. For FY07 and FY08 there were no charges for DHAPP.

USAID Indirect Cost Model

Definition of Variable

Indirect Cost Variables

  • USAID's indirect support costs include the services provided by the Agency's Washington-based operating units and benefiting all worldwide programs managed by the Agency. These include, but are not limited to, the costs associated with the Bureau for Management, Bureau for Legislative and Public Affairs, Office of Equal Opportunity Programs, Office of Security, Office of Disadvantaged Business Utilization, as well as, staff training and personnel support.
  • Each year USAID identifies the total cost per category of the units or offices that support PEPFAR dedicated staff. The actual amounts for each of these categories are based on dollars reported to Congress in the Congressional Budget Justification (CBJ). The total costs reported in the CBJ, are then adjusted, as needed, for PEPFAR specifically. The total adjusted cost for supporting PEPFAR is then divided by the total costs of the USAID operating units. This equation results in an annual indirect cost rate, which has been averaged over the two years.
  • The Indirect Overhead Rate is then applied to the total cost of headquarters and field PEPFAR dedicated staff salaries and benefits (only those paid for by the GHCS-State account), resulting in an indirect cost amount.

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