00-31021. Notice of Indirect Cost Rates for the Damage Assessment and Restoration Program

AGENCY:

National Oceanic and Atmospheric Administration (NOAA), DOC.

ACTION:

Notice.

SUMMARY:

NOAA's Damage Assessment and Restoration Program (DARP) is announcing new indirect cost rates and a policy on the recovery of indirect costs for its component organizations invovled in natural resource damage assesment and restoration activities. These new rates and the DARP policy are effective as of October 1, 2000. More information on these rates and the DARP policy can be found at the DARP web site (www.darp.noaa.gov),, or from the address provided below.

EFFECTIVE DATE:

October 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Eli Reinharz, 301-713-3038, ext. 193; (FAX: [phone]; e-mail: [e-mail]), or Linda Burlington, 301-713-1217 (FAX: [phone]; e-mail: [e-mail]).

SUPPLEMENTARY INFORMATION:

The mission of the DARP is to restore natural resource injuries caused by releases of hazardous substances or oil under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. 9601 et seq.), the Oil Pollution Act of 1990 (OPA) (33 U.S.C. 2701 et seq.), or physical injuries in Naitonal Marine Sanctuaries under the National Marine Sanctuaries Act (NMSA) (16 U.S.C. 1431 et seq.). The NOAA DARP consists of three component organizations: The Damage Assessment Center (DAC) within the National Ocean Service; the Restoration Center within the National Marine Fisheries Services; and the Office of the General Counsel for Natural Resources (GCNR). The DARP conducts Natural Resource Damage Assessments (NRDAs) as a basis for recovering damages from responsible parties, and uses the funds recovered to restore injured natural resources.

When addressing NRDA incidents, the costs of the damage assessment are recoverable from responsible parties who are potentially liable for an incident. Costs include direct and indirect costs. Direct costs are costs for activities that are clearly and readily attributable to a specific output. In the context of the DARP, outputs may be associated with damage assessment cases, or may be represented by other program products such as damage assessment regulations. In contrast, indirect costs reflect the costs for activities that collectively support the DARP's mission and operations. For example, indirect costs include general administrative support and traditional overheads. Although these costs may not be readily traced back to a specific direct activity, indirect costs may be allocated to direct activities using an indirect cost distribution rate.

Consistent with Federal accounting requirements, the DARP is required to account for and report the full costs of its programs and activities. Further, the DARP is authorized by law to recover reasonable costs of damage assessment and restoration activities under CERCLA, OPA, and the NMSA. Within the constraints of these legal provisions and their regulatory applications, the DARP has the discretion to develop indirect cost rates for its component organizations and formulate policies on the recovery of indirect cost rates subject to its requirements.

The DARP's Indirect Cost Effort

In December 1998, the DARP hired the public account firm Rubino & McGeehin, Chartered (R&M), to: (1) Evaluate the cost accounting system and allocation practices; (2) recommend the appropriate indirect cost allocation methodology; and, (3) determine the indirect cost rates for the three organizations that comprise the DARP.

The DARP requested an anlysis of its indirect costs for fiscal years (FY) where cost information was considered adequate to conduct such an analysis. Consequently, indirect cost rates were developed for the DAC and GCNR for FYs 1993 through 1999, and for the RC for FYs 1997 through 1999 (see Table below). The goal was to develop the most appropriate indirct cost rate allocation methodology and rates for each of the DARP component organizations.

R&M concluded that the cost accounting system and allocation practices of the DARP component organizations are consistent with Federal accounting requirements. R&M also determined that the most appropriate indirect allocation method was the Direct Labor Cost Base for all three DARP component organizations. The Direct Labor Cost Base is computed by allocating total indirect cost over the sum of direct labor dollars plus the application of NOAA's leave surcharge and benefits rates to direct labor. The indirect costs rates that R&M computed for each of the three DARP component organizations were further assessed as being fair and equitable. A report on R&M's effort, their assessment of the DARP's cost accounting system and practice, and their determination respecting the most appropriate indirect cost methodology and rates can be found on the DARP web site at: www.darp.noaa.gov. The report is entitled “Indirect Cost Rates Incurred by the National Oceanic and Atmospheric Administration Damage Assessment and Restoration Program.”

The DARP's Indirect Cost Policy

The DARP will include the costs of program policy work and techniques and methods development in indirect cost pools of its component organizations, but will monitor these activities annually to control costs. The indirect cost pools also include the cost of general management and administrative support and preparedness for spill response work.

The DARP will apply the revised rates recommended by R&M for the respective fiscal years for each of the DARP component organizations as provided in the following table:

DARP unit	Fiscal years (FY) (in percent)
	FY93	FY94	FY95	FY96	FY97	FY98	FY99
DAC	226.63	247.83	285.33	306.58	250.08	249.81	161.33
RC	N/A	N/A	N/A	N/A	139.70	142.82	203.24
GCNR	107.10	107.24	147.05	286.82	173.30	191.12	239.08
N/A—Not applicable. Rates were not calculated for these years.

The revised rates identified in this policy will be applied to all damage assessment and restoration case costs as of October 1, 2000, using the Direct Labor Cost Base allocation methodology. For cases that have settled and for cost claims paid prior to October 1, 2000, the DARP will not re-open any resolved matters for the purpose of applying the revised rates in this policy. For cases not settled and not cost claims not paid prior to October 1, 2000, costs will be recalculated using the revised rates in this policy. The DARP will use the FY 1999 rates for future fiscal years until year-specific rates can be developed.

Dated: December 1, 2000.

Margaret Davidson,

Assistant Administrator for Ocean Services and Coastal Zone Managmenet.