24 Mar

Will COVID-19 Affect Overhead Deadlines or Allowable Costs?

If you are like me, you have received an email about the COVID-19 crisis from every company you work with, to the point it’s probably become overwhelming.

Hopefully without adding to that problem, I want to provide an update based on a couple questions we’ve received already.

Will state DOT overhead submittal deadlines be affected by the COVID-19 crisis?

I’m working with ACEC national to identify any potential changes.  We have been in contact with AASHTO Audit Subcommittee leadership to establish a process for sharing information on any impacts to state DOT overhead submittal processes or deadlines.  At this point, we are not aware of any states changing their deadlines, so we all need to operate under the same deadlines for now.  Most state DOT overhead submittals are electronic and I expect that state DOT audit leadership are currently working remotely or in the office on a limited basis.  We will keep you updated on any changes and we hope to establish a web page or link to list any current updates.

Are costs related to the COVID-19 crisis allowable?

Generally speaking, yes.  I would strongly suggest that you start tracking these costs – both labor and non-labor – so you can identify your costs of responding to the crisis.  This will probably have a lot of value outside of your FAR reporting, such as providing the necessary information for insurance claims and tax relief.  FAR Part 31 operates on the basis of key cost principles which include the requirement for supporting documentation for the business purpose for costs, and the evaluation of cost reasonableness based on the “prudent person test” – what a prudent person would do in similar circumstances in the conduct of competitive business.  I think you will have a lot of leeway here to do what you think is appropriate in response to the crisis.  But if your overhead rate increases significantly in 2020 as a result of the impacts to your business, you’ll need to be able to explain why.


What A/E Clarity is Doing

Re-Tooling our Training Schedule

We recognize that for the upcoming fall 2020 training season, many of you may not be inclined to travel to live training events, so we will be developing a series of new web-based courses that will be available as separate modules or together as the equivalent of a one-day or two-day event (to attend at your own pace in shorter sessions).  That’s not to say that we won’t have live training, but it’s much too early to make that decision.

Webinar on the Effect of Business Disruption on your Overhead Rate

We will be developing a webinar to address issues related to the effects of business disruption on your overhead rate, including steps you should take to properly support the allowability of costs and estimate the effects of business changes on your overhead rate.  We expect to schedule this for May, as new information is coming in all the time that will be relevant for discussion.

Regular Updates

We plan to provide regular updates on relevant information through our newsletter and her on aeclarity.com.


Be well and stay safe,

Dan Purvine