Who establishes final indirect cost rates binding on all agencies?

The correct answer is that a single agency establishes final indirect cost rates that are binding on all agencies. This process typically involves a designated agency that has the authority to negotiate and establish these rates. Once finalized, these rates are applicable across all federal agencies that engage in contracts with the contractor.

In this context, indirect costs pertain to expenses that are not directly attributable to specific contracts or projects but are necessary for the overall operation of the organization. By having a single agency handle the establishment of these rates, it helps create a standardized process, ensuring consistency and fairness across different contracts and agencies.

Other options, while they may influence the process or have roles in the oversight of indirect costs, do not have the authority to finalize and bind rates for all agencies. For example, the Office of Management and Budget provides guidance and oversight but does not establish these rates directly. Similarly, the Department of Defense, while a significant agency, does not have the universal authority to set indirect rates for all government contracts. Each contracting agency may follow various policies, but they rely on the rates set by the designated single agency.