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(c) Whether the contractor deviated from established practices of the contractor, which <br />may unjustifiably increase the cost. <br />ALLOCABLE COSTS <br />(1) A cost is allocable to the contract if all of the following conditions are met: <br />(a) It is assignable or chargeable to the contract in accordance with the relative benefit <br />received because either: <br />(i) It was incurred specifically and solely for the performance of the contract; or <br />(ii) It benefits both contract and non-contract objectives and can be distributed <br />between them in reasonable proportion to the benefits received; or <br />(iii) It is necessary for the overall operation of the contractor even if a direct <br />relationship to the contract cannot be shown. <br />(b) It is not allocable to or included as a cost of any other contract, grant, agreement or <br />program in either the present or any prior period, or used as cost-sharing or matching <br />for another contract or grant, except when the contract specifically authorizes such <br />duplicate allocation. <br />(c) It is accorded consistent treatment with costs of a similar nature. <br />(2) Contract-Specific Direct Costs: If a cost is allocable to the contract pursuant to subsection <br />(l)(a)(i) of this section, the entire amount may be charged to the contract. <br />(3) Shared Direct Costs: If a cost is allocable to the contract pursuant to subsection (l)(a)(ii) of <br />this section, the charge shall be considered to be in reasonable proportion to the benefits <br />received if the charge is based on time distribution records, random moment time samples, <br />equivalent work units, or space utilization. Other equitable methods may be used with the <br />prior approval of the Department. Allocation of charges based on revenue distribution is <br />not an acceptable method. <br />(4) Indirect Costs: If a cost is allocable to the contract pursuant to subsection (l)(a)(iii) of this <br />section, the charge shall be considered to be in proportion to benefits received if it is <br />based on the total distribution of costs allocated pursuant to subsections (2) and (3) of this <br />section, or if it is based on staff time directly spent in contract and non-contract activities. <br />Other equitable methods may be used with the prior, written approval of the Department. <br />(5) Contractors and cost-related subcontractors shall maintain a current cost allocation plan <br />describing how costs are allocated. <br />(6) Department approvals required in subsections (3) and (4) of this section shall be obtained <br />by submitting a cost allocation plan to the contract manager. The cost allocation plan shall <br />identify the period of time covered by the plan, the cost items to be allocated, the allocation <br />method, the program areas to which costs are allocated, and the resulting allocations using <br />budgeted costs. Copies of indirect cost allocation plans submitted for federal grant <br />Washington State <br />Health Care Authority Page 74 of90 HCA Contract No. K3924