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15 <br />III. COSTS, EARNINGS AND REIMBURSEMENT <br />A. Contract Amount Adjustments (Applies to C2AP, C3AP) (5 CCR 18033, <br />18034) <br />Child Development and Fiscal Services (CDFS) shall conduct monthly analyses <br />of caseloads and expenditures and adjust agency contract maximum <br />reimbursable amounts and allocations as necessary to ensure that funds are <br />distributed in proportion to need. Prior to such action, however, CDFS will notify <br />the contractor of the proposed action and the contractor will be gi ven an <br />opportunity to provide written documentation that demonstrates the CDFS <br />projections are inaccurate. Because of the need to transfer funds to an under- <br />funded agency as quickly as possible, the contractor shall have three (3) working <br />days from the date of notification to respond. <br />B. Reasonable and Necessary Costs (5 CCR 18013(s), 18033, WIC 10213.5, 2 <br />CFR 200.404) <br />Contractors may be reimbursed for actual costs that are reasonable and <br />necessary to the performance of the contract. Reasonable and necessary costs <br />are those costs that do not exceed what an ordinarily prudent person would incur <br />in the conduct of a competitive business under the circumstances prevailing at <br />the time of the decision to incur the cost, and whether the cost is of a type <br />recognized as ordinary and necessary for the operation of the entity or the proper <br />and efficient performance of the award. Consideration must be given to market <br />prices for comparable goods or services for the geographic area. <br />C. Indirect Costs (5 CCR 18013(m), 18013(n), 2 CFR 200.414) <br />1. If indirect costs are claimed, an indirect cost allocation plan must be on file <br />with the contractor and available for review by the CDSS staff and auditors. <br />2. The maximum indirect cost rate shall be ten percent (10%) of the modified <br />total direct costs. <br />3. For any non-federal entity that has a negotiated indirect cost rate with CDE, <br />which includes all school districts and county offices of education, the <br />maximum indirect cost rate shall be the lesser of the CDE negotiated indirect <br />cost rate or ten percent (10%). <br />4. Pursuant to 2 CFR 200.414(f), a non-federal agency that does not have a <br />current negotiated rate, except for those non-Federal entities described in <br />appendix VII to this part, paragraph D.1.b, may elect to charge a de minimis <br />rate of ten percent (10%) of modified total direct costs (MTDC) which may be <br />used indefinitely. No documentation is required to justify the 10% de minimis <br />indirect cost rate.