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**Sandia National Laboratories**

**Contract Audit**

**ECC Instructions**

**Cost Reimbursable Type Contracts**

## [User Information:]{.underline}

The following information does not supercede any statute, regulation or
policy that is, was or will be in effect. It is designed as a tool to
answer general questions that are commonly posed by contractors that are
subject to audits from the Sandia Contract Audit Department
(hereinafter, Contract Audit). For specific questions pertaining to your
contract, contact the appropriate Sandia Contracting Representative
(SCR) listed on your contract.

**Sandia is a multiprogram laboratory operated by Sandia Corporation, a
Lockheed Martin Company, for the United States**

**Department of Energy's National Nuclear Security Administration under
contract DE-AC04-94AL85000.**

[]{#_Table_of_Contents .anchor}**[Table of Contents:]{.underline}**

[User Information 1](#user-information)

> [Step by Step Instructions for Cost Reimbursable Cost Claim
> 2](#step-by-step-instructions-for-cost-reimbursable-electronic-cost-claim-ecc)
>
> [Unallowable Costs 5](#unallowable-costs)

[Indirect Rates 5](#indirect-rates)[When Do I Need to Submit a Cost
Claim? 6](#when-do-i-need-to-submit-a-cost-claim)

[Where Do I Send It? 6](#__RefHeading___Toc60906020)

### Step by Step Instructions for Cost Reimbursable Electronic Cost Claim (ECC):

In preparing the ECC we recommend each contractor reconcile their claim
to the general ledger amount to ensure that all costs are properly
accounted for. Costs previously claimed in error can be adjusted out of
your claim.

For universities and other educational institutions, we have provided an
"Example University Claim." The primary difference between the
requirements for a business and an educational institution is that
faculty salaries and student salaries (or wages) must be segregated.
This facilitates the correct application of labor overhead rates. It is
imperative that the correct overhead rates are used with the appropriate
cost bases.

All ECCs should be submitted in a single Excel workbook with separate
worksheets for each contract. There should be a separate submission for
each fiscal year. If templates or examples have not previously been
provided they are available at
<http://www.sandia.gov/supplier/audit/ecc.htm>

Step by step instructions for filling out the Cost Reimbursable contract
type ECC template are as follows:

-   Company Name: Insert the name of your company, university,
    laboratory, etc.

-   Contract Number: Insert the contract number shown on the SNL
    contract cover page. You may also include in parentheses, your own
    unique contractor number if one has been assigned to it.

-   Period of Performance: Insert the current period of performance
    beginning and ending dates from your contract. The period of
    performance end dates (POP end) routinely change so it is important
    that you refer to the most recent contract revision or amendment.

-   Contract Ceiling Amount: The maximum authorized amount that may be
    billed to the contract can be found in your contract document. Use
    the most recent revised or amended amount. Contact your Sandia
    Contracting Representative (SCR) if you have any questions.

-   Fiscal Year: Insert your entity's fiscal year to which the claimed
    costs apply.

-   Month: Insert the month of the year. The first month listed should
    be the first month of your fiscal year. For example, business
    entities with a June 30 FYE would show July as the first month.

-   Indirect Rate: Insert the rate, if any, which you applied to your
    direct costs. This column may be used to calculate the amount of
    indirect costs claimed, by multiplying the appropriate rate times
    the applicable direct cost(s). Please see the "Indirect Rate"
    section below in this document for additional information.

-   Direct Labor: Insert actual direct labor costs by major labor cost
    category for each accounting period. Segregate university professor
    and professional labor from student labor. Examples of major labor
    cost categories would be Engineer III, Geologist I, Machinist IV,
    and Systems Analyst II. Insert zeros if direct labor is not charged
    to the contract.

-   Direct Labor Overhead: Insert the overhead rates associated with
    your claimed direct labor charges if this are being claimed and
    billed. If there is more than one direct labor overhead rate used,
    list them separately. Examples include: Off-site direct labor
    overhead, on-site direct labor overhead, overtime direct labor
    overhead. All claimed indirect rates must be allowable, allocable,
    and audited or approved by your cognizant agency. Please see the
    "Indirect Rate" section below in this document for additional
    information.

-   Direct Materials: List the actual direct material costs for each
    accounting period.

-   Direct Material Handling Rate: If you are claiming a direct
    material-handling rate, show that separately. All claimed indirect
    rates must be allowable, allocable, and audited or approved by your
    cognizant agency. Please see the "Indirect Rate" section below in
    this document for additional information.

-   Direct Travel: List applicable travel charges for each accounting
    period.

-   G&A (General and Administrative Rate): Insert amounts claimed for
    G&A. All claimed indirect rates must be allowable, allocable, and
    audited or approved by your cognizant agency. Please see the
    "Indirect Rate" section below in this document for additional
    information.

-   Subcontracts/Consultant/Temporary Labor: List the costs associated
    with these items. ***If these charges account for more than 10% of
    all contract charges, the contractor is responsible for providing to
    Sandia, a cost claim that has been prepared by the subcontractor,
    consultant or temporary labor provider showing their claimed charges
    associated with the contract.*** These shall be submitted
    concurrently with your (the prime contractor's) cost claim using the
    same or similar format. Subcontractor's, Consultants and temporary
    Labor providers are also subject to audit.

-   Other Direct Costs (ODCs): For any other direct costs that you are
    claiming, segregate those costs accordingly. Some examples may
    include: Licensing fees, equipment leases, shipping and handling,
    taxes, etc. Feel free to add additional columns if deemed necessary
    for major cost categories which are unique to your contract.

-   Total Costs: Total of all costs claimed.

-   Fee: Total amount of fee earned at the rate specified in your
    contract.

-   Fee Withheld: Amount of fee earned that has not yet been billed.

-   Amount per General Ledger: Amount of costs associated with the
    contract and booked to your General Ledger (G/L).

-   Invoice/Credits/Payments Resulting from prior audit adjustments: If
    the contract(s) that you are submitting cost claim information for
    has (have) been previously audited, it is very important that you
    include amounts you billed to Sandia and/or amounts you paid to
    Sandia, i.e., issuing a check or credit memo to Sandia, reducing an
    invoice amount, etc., as a result of prior audit findings. These
    amounts should be reported separately from your regular invoice
    amounts in the appropriate column of the cost claim template. The
    check, invoice or credit number and date should be clearly
    identified. Use the column marked "Invoice /Credits/Payments..." to
    report these amounts. Use the "Comments" column to explain the
    origin of each. Omission of this information could result in a bill
    back or payment errors when the contract is closed out.

-   Adjustments: Include any amounts that you have over billed or under
    billed to Sandia and discovered subsequent to the billings. This
    could be due to errors or omissions. This is an opportunity to claim
    any corrections noted as part of your review.

-   Total Amount Claimed: This amount should equal the amount shown "Per
    the General Ledger," plus or minus any adjustments due to prior
    audit findings, and plus or minus any "Adjustments" as a result of
    errors or omissions.

-   Comments: Use this column to describe any adjustments or other
    important aspects of your electronic cost claim.

### Unallowable Costs

Costs that are expressly unallowable per the FAR and other regulations,
or costs mutually agreed to be unallowable must be excluded from any
billing, claim or proposal. This includes direct as well as indirect
costs. Costs that were incurred in conjunction with contract execution,
which are unallowable, whether they are part of any base or pool must be
identified and listed on the "Schedule of Unallowable Costs." Regardless
of whether any of these costs were claimed or billed, these costs must
be included on the schedule. Note on the schedule if you had previously
claimed these costs. Refer to FAR part 31 or your contract terms and
conditions for more information on unallowable costs.

### Indirect Rates

Proposed indirect rates must be part of, supported by, and consistent
with the established accounting system. We apply indirect rates where
applicable and appropriate and this is often dictated by the contract
terms and conditions. The federal agency with which a contractor has the
most business is generally responsible for auditing indirect rates and
is referred to as the "cognizant agency."

If Sandia is the cognizant agency and you are claiming and billing
indirect rates, then an indirect rate cost claim is required in
conjunction with your Cost Reimbursable ECC. To submit the indirect rate
cost claim, complete the Indirect Rate Calc Template which is included
in the Cost Reimbursable ECC Template.

If Sandia is not the cognizant agency, it is not required that you
provide the information for the rate calculation. The latest rates as
set forth by a contractor's cognizant agency (i.e., the Defense Contract
Audit Agency, Department of Health & Human Services, Office of Naval
Research, or other) will be accepted. [A contractor is required to
provide the latest rate report(s) from the cognizant agency as part of
their cost claim.]{.underline} The rate report sheets may be faxed to
our fax number below or e-mailed to us. Additionally, please provide the
cognizant agency's contact information including auditor's name and
phone number.

[Back to the Table Of Contents](#_Table_of_Contents)

## When Do I Need to Submit a Cost Claim?

ECCs should be submitted annually for each contract to which Sandia has
audit rights. The annual submissions are due 90 days after a
contractor's fiscal year end. Please note that it is imperative that you
check for accuracy and completeness prior to your submission.

[Back to the Table Of Contents](#_Table_of_Contents)

## Where Do I Send It?

Send ECCs via e-mail to: <snlaudit@sandia.gov>

Fax indirect rate sheets to 505-844-9728 attention Contract Audit
Department.

Additional information may be found at the Contract Audit website at:
<http://www.sandia.gov/supplier/audit/ecc.htm>

[Back to the Table Of Contents](#_Table_of_Contents)