Centers for Disease Control and Prevention: An Appropriate Methodology Is Needed for Determining Administrative Costs Attributable to the Agency for Toxic Substances and Disease Registry
GAO-10-610R
Published: May 20, 2010. Publicly Released: May 20, 2010.
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Highlights
This letter formally transmits and summarizes an oral briefing we gave on April 12, 2010, in response to House of Representatives Explanatory Statement, 155 Cong. Rec. H2113 (daily ed., Feb. 23, 2009), accompanying the Omnibus Appropriations Act, 2009 (Pub. L. No. 111-8, 123 Stat. 524) (2009). GAO was directed to review the indirect costs the Agency for Toxic Substances and Disease Registry (ATSDR) paid the Centers for Disease Control and Prevention (CDC). Specifically, our objectives were to (1) describe CDC's methodology for determining and allocating indirect costs to bill ATSDR for administrative services and (2) determine if the methodology CDC uses to bill ATSDR appropriately considers relevant laws and guidance.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Centers for Disease Control and Prevention | Because of the importance of having an appropriate methodology in place to provide a reasonable basis for the indirect costs charged and to assist the Congress and agency officials in making decisions about allocating federal resources, the Director of CDC should continue efforts to develop and implement an appropriate methodology for identifying and allocating actual costs, including direct and indirect costs to ATSDR, that is in compliance with federal statutes and relevant guidance. |
Closed – Implemented
In April 2011, the Centers for Disease Control and Prevention delivered its final report documenting an indirect cost methodology which assigns the agency's centralized business service support costs based on cost pools, cost drivers, and cost rates in compliance with federal laws and regulations. Further, the final report provided the models and calculations for estimating Fiscal Year 2011 indirect cost rates using Fiscal Year 2010 costs as a baseline.
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| Centers for Disease Control and Prevention | Because of the importance of having an appropriate methodology in place to provide a reasonable basis for the indirect costs charged and to assist the Congress and agency officials in making decisions about allocating federal resources, the Director of CDC should document its cost methodology and its process for determining the amount charged to ATSDR. |
Closed – Implemented
In April 2011, the Centers for Disease Control and Prevention delivered its final report documenting an indirect cost methodology which assigns the agency's centralized business service support costs based on cost pools, cost drivers, and cost rates in compliance with federal laws and regulations. The final report provided the models and calculations for estimating Fiscal Year 2011 indirect cost rates using Fiscal Year 2010 costs as a baseline. CDC will be able to use this methodology to routinely update its indirect cost rates.
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| Centers for Disease Control and Prevention | Because of the importance of having an appropriate methodology in place to provide a reasonable basis for the indirect costs charged and to assist the Congress and agency officials in making decisions about allocating federal resources, the Director of CDC should reevaluate its indirect cost methodology on a regular basis to ensure that it is adequately identifying and allocating current indirect costs. |
Closed – Implemented
In April 2011, a Centers for Disease Control and Prevention (CDC) contractor delivered a document to assist CDC in understanding their respective roles and responsibilities in the context of the indirect costs methodology and provide indirect costs stakeholders with the tools necessary to document processes, allocate workload among employees, and keep abreast of tasks that must be completed in order to refresh and sustain the indirect costs methodology. The document identified key milestones, timeframes, tasks and activities that would need to be completed through fiscal year 2013. Also, in October 2011, CDC implemented a indirect costs methodology Standard Operating Procedures (SOP) manual which included detailed guidance for the annual updated for the indirect costs pools and drivers. This methodology will be followed by CDC to refresh the cost data and operational data for the use in the indirect costs methodology, which is scheduled to be performed annually in October. CDC also developed an indirect cost governance board to provide a structure and effective governance process for the IDC methodology by ensuring senior level engagement and oversight, and promoting transparency. The governing body was formed during Fiscal Year 2012. Furthermore, CDC stated that it completed an effort to refine the IDC methodology by expanding the original 19 cost pools in the Fiscal Year 2011 model to 35 cost pools in the Fiscal Year 2012 model.
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Topics
AccountabilityAdministrative costsAllocation (Government accounting)Cost accountingCost analysisEvaluation methodsFederal regulationsInternal controlsOverhead costsToxic substances and disease registry