When you receive a Phase II SBIR, STTR, R01, BARDA, ARPA-E or BAA grant or contract, you need to comply with the Federal Acquisition Regulation (FAR) Part 31, specifically FAR 52.216-7. Of course, there are pitfalls along the way. Overspending on Direct Costs is one of them.
After more than 30 years of specializing in government award accounting, we know the mistakes government awardees make, and how to prevent them. This 10-part blog series, “Top 10 Mistakes Government Awardees Make,” is designed to help you avoid trouble and protect your innovation and business.
There two main reasons why a grantee or contractor overspends on direct costs.
In our experience, the main reason projects have unplanned, direct cost overruns is poor accounting practices.
Here are the poor accounting practices we see most often, and how to fix them.
You really only have two options:
Option 1. If there’s a valid reason for overspending, such as a structural change or an unexpected and unavoidable change in costs, you may be able to go back to your government customer and negotiate for additional funding.
Option 2. Once you recognize that you may be overspending on a project, it’s important to sit down and re-budget. Re-evaluate your desired outcome and quickly make changes to reduce your spending.
If you’re concerned about your direct costs and how to get them under control, do not wait until the end of the year to address it. You need to make steps now to solve the situation.
Ready to Learn More? Speak With A Government Funding Award Expert! Call Now: 781-862-5170 – or – Schedule A Call
Learn more about another common mistake, Overspending on Indirect Cost Rates.
To learn more our FAR-compliant accounting system, JamesonWorx, read our blog.
Not all government contracts and grants are the same. Your funding agency, type of award, and funding stage require unique accounting requirements. Provide your information below to schedule a time to speak with one of our government funding experts!
Writing A Government Funding Proposal
Received A Pre-Award Notification
Received A Funding Award
National Institute of Health / HHS
Department of Defense (DOD)
National Science Foundation
Department of Energy (DoE)
SBIR/STTR Phase I
SBIR/STTR Phase II
R01, U01, Carb-X, HEAL or Pioneer Grant
EERE or ARPA-E Award
One of our government funding experts will contact you within 48 hours to schedule a phone call.