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• 2/7/85 AC 150/5100-14A b. Overhead Costs. Overhead costs include overhead on direct salary costs as well as general and administrative overhead. (1) Labor Overhead. Overhead on direct salary costs includes sick leave, vacation, and holiday pay; unemployment, excise and payroll taxes; contributions for social security, employment compensation insurance, retirement benefits, and medical insurance benefits; and any other benefits customarily paid to or enjoyed by other employees. The allowable percentage for labor overhead allocable to a project is the ratio of (a) a firm's total direct labor overhead costs to (b) a firm's total direct salary costs (excluding overtime) for a given period, usually the average for the past 3 years. (2) General and Administrative Overhead. General and administrative overhead includes the following indirect costs which are not directly attributable to specific projects. (i) Provisions for office, light, heat, and working space; depreciation allowances or rental for furniture; drafting equipment and engineering instruments; and office and drafting supplies not identifiable to specific projects. (ii) Taxes and insurance other than those included as salary cost, but excluding Federal income taxes. (iii) Library and periodical expenses, and other means of keeping abreast of advances in engineering such as attendance at technical and professional meetings and subscriptions to trade, business, professional, or technical periodicals. (iv) Executive, administrative, accounting, legal, stenographic, and clerical salaries and expenses (other than identifiable salaries included in direct salary costs, expenses included in reimbursable nonsalary expenses, and salaries or imputed salaries of partners and principals) to the extent that they perform general executive and administrative services as distinguished from technical or advisory services directly applicable to particular projects. (v) Costs of membership in trade, business, technical, and professional organizations. (vi) Incentive compensation for management employees, cash bonuses, suggestion awards, safety awards, and incentive compensation -based on production, cost reduction, or efficient performance are allowable to the extent that the overall compensation is determined to be reasonable, and such costs are paid or accrued pursuant to an agreement entered into in good faith between the consultant and the employees before the services are rendered or pursuant to an established plan followed by the consultant so consistently as to imply, in effect, an agreement to make such payment. The allowable percentage for general and administrative overhead allocable to a project is the ratio of (1) all general and administrative costs to (b) total direct salary costs (excluding overtime) for a given period, usually the average for the past 3 years. The annual audited amount may also be used. Chap 4 Par 30 23