DFAS Frequently Asked Questions

Cost Analysis/Financial Capability/Accounting System Reviews

1. How do I request a cost analysis, financial capability or accounting system review from DFAS, and who will be the contact person?

For cost analysis, Contracting Officers/Specialists should forward to the DFAS Special Reviews Branch a “Request for Financial Advisory Services” form with a copy of the business proposal and any other relevant business data. Grants Management Officers/Specialists should use the same form attaching the grant application cover page, budget, budget justification and checklist.

For financial capability and accounting system reviews, the Special Reviews Branch should be contacted via telephone or email, and a copy of the organizations’ most recent financial statements should be forwarded to DFAS. (The “Request for Financial Advisory Services” form can also be used for these requests.)
The DFAS Contact person is Sheila Brown, Chief, Special Reviews Branch, phone (301) 402 - 6079 or email brownshc@od.nih.gov. The address is, 6701 4th floor, Rockledge Dr, Bethesda, MD 20817.

2. What is considered a reasonable escalation factor for direct labor and other direct costs?

Annual escalation factors for direct labor which are within 1% point of the projected weighted average annual change in the Consumer Price Index (CPI) for the contract period are considered reasonable for estimating /funding purposes. For increases exceeding 1% point of the projected weighted average annual change in the CPI, the organization’s historical salary increases should be analyzed and compared to the proposed increase to determine reasonableness.

For costs other than labor, the proposed escalation factor should be compared to the projected weighted average annual change in the CPI for the contract period. Proposed increases that exceed the projected weighted average annual change in CPI would require additional documentation to support reasonableness.

DFAS subscribes to a service that provides CPI projections. For more information contact Lorraine Trexler, Director, Division of Financial Advisory Services, phone (301) 496-4401 or email lt156e@nih.gov

3. How do I proceed with my cost analysis if an organization does not have an NIH negotiated indirect cost rate agreement?

Ask the organization if it has ever had rates negotiated with the federal government. If it has, request a copy of the rate agreement. If the rate agreement has expired, contact officials with the agency that negotiated the rates and ask if they can recommend rates for funding purposes.

If the organization is new to the government and does not have negotiated rate(s), ask for a schedule to support its proposed rate(s) and then contact the DFAS Specials Reviews Branch at (301) 496-4494 to request assistance in calculating recommended rate(s) for funding purposes.

If the organization receives a cost-reimbursement award, notify the cognizant rate negotiation office that indirect cost rates need to be negotiated. For commercial organizations receiving the preponderance of their awards from NIH, contact the DFAS Indirect Cost Branch at (301) 496-2444 or email your questions to dfas-idc@nih.gov.

4. Can Grants Management Specialists request DFAS to perform a Cost Analysis for large or complex grants, e.g., a P60 (Comprehensive Center) award?


5. Under what circumstances should DFAS be requested to perform a financial capability or accounting system review?

DFAS should be requested to perform a financial capability and/or accounting review if any of the following apply :
  • responses to the EVALUATION OF FINANCIAL MANAGEMENT SYSTEMS (NIH access only) warrants a detailed review,
  • the organization has never before received a federal grant/contract or has not received federal funding in a long time,
  • a newly established company – in existence less than five years,
  • the most recent financial statement audit contains a “going concern” note,
  • the company appears on the HHS Alert List for going concern, financial management or accounting system issues,
  • the most recent financial statements were not audited by a CPA firm,
  • on the balance sheet, total current liabilities are greater than total current assets
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Director: Hruta Virkar

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