Indirect rates are how you allocate costs that are not tied to one specific contract, rent, admin salaries, insurance, across all the work that has to pay for them, usually as a percentage of a base like direct labor. You calculate them from your own accounting records, and on cost-reimbursement contracts, the government can review or audit them directly. Getting your indirect rates wrong in either direction costs you: too high and you look expensive next to competitors, too low and you are not actually recovering your real overhead.

In a sentence

"The contractor's proposed indirect rates shall be supported by current accounting data." A rate you cannot back up with your own books is a rate an evaluator, or an auditor, will not accept, so your accounting system has to be able to prove the number you are quoting.