1. How do we get a copy of the Indirect Cost Guide? 
    "A Guide to Indirect Cost Rate Determination" is available on the U.S. Department of Labor's (DOL) website.
  2. Who needs an indirect cost rate? 
    Organizations generally charge indirect costs by applying an indirect cost rate. Any organization that received Federal awards and requested recovery of indirect costs on cost reimbursable grants, contracts, and cooperative agreements must have an approved indirect cost rate agreement, unless the 15% de minimis rate is elected per 2 CFR 200.414(f)(link is external) and approved by the grant officer. Organizations with only one source of funding (specific grant or contract), however, don't need a rate as all costs would be allocable to the specific funding source.
  3. Why do I need an indirect cost rate? 
    Your organization needs an indirect cost rate for: management information, to be in compliance with Federal regulations, 2 CFR Part 200, Subpart E & Appendix IV, or the FAR (whichever applies), close-out purposes, and for audit documentation.
  4. Where can I find information on the applicable cost principles? 
    Available website links for the cost principles are available in the Cost & Price Determination Division (CPDD) website.
  5. What is an indirect cost rate? 
    An indirect cost rate is a percentage (indirect cost pool/direct cost base) used to distribute indirect costs to all cost centers benefiting from those costs.
  6. Which agency should approve my indirect cost rate(s) and issue a Negotiation Agreement? 
    Unless specifically assigned by 2 CFR 200, Appendix V, F.1.(link is external), the federal agency with the preponderance of direct funding is normally your cognizant agency. Your Federal cognizant agency is responsible for negotiating your indirect cost rate and issuing the appropriate Negotiation Agreement. Note that if a subrecipient receives pass-through Federal funding, the subrecipient will need to negotiate a rate with the pass-through entity following guidance from 2 CFR 200.332(a)(4). (link is external)
  7. What documentation is required as part of the provisional (based on budgetary costs) or final (based on incurred costs) indirect cost rate proposal? 
    Please refer to our website’s checklist. Also available in Section II (Page II-4) of our indirect cost guide.
  8. How many days do we have to submit a provisional (based on budgetary information) indirect cost rate proposal - 1st time? 
    All organizations must submit their initial indirect cost rate proposal to their cognizant agency within 90 days of receiving a cost reimbursable grant/contract award. For example, 2 CFR, Part 200, Appendix IV, C.2.b., states: “b. Except as otherwise provided in §200.414 Indirect (F&A) costs paragraph (e) of this Part, a nonprofit organization which has not previously established an indirect cost rate with a Federal agency must submit its initial indirect cost proposal immediately after the organization is advised that a Federal award will be made and, in no event, later than three months after the effective date of the Federal award.”
  9. How many days do we have to submit a final (based on incurred costs) indirect cost rate proposal? 
    All organizations must submit their final indirect cost rate proposals within 180 days of the end of your organization’s fiscal year. For example: For example, 2 CFR, Part 200, Appendix IV, C.2.c., states: “c. Unless approved by the cognizant agency for indirect costs in accordance with §200.414 Indirect (F&A) costs paragraph (f) of this Part, organizations that have previously established indirect cost rates must submit a new indirect cost proposal to the cognizant agency for indirect costs within six months after the close of each fiscal year.”
  10. For how long do we need to submit annual indirect cost rate proposals based on incurred costs? 
    For the life of the cost reimbursable contract/grant period. For example: You receive a three-year grant award (July 1, 2022 through July 1, 2025). Your fiscal year ends on December 31st. 

    Based on the above example, your organization would need to submit final incurred cost proposals for the organizations’ fiscal year ending (FYE): 12/31/2022, 12/31/2023, 12/31/2024, and 12/31/2025.
  11. How many days does it takes my Federal cognizant agency to process my indirect cost rate proposal? 
    The DOL’s Cost & Price Determination Division (CPDD) typically issues indirect cost rate agreements within 150 days of proposal receipt pending no unforeseen negotiation issues.
  12. What is the correct DOL address for submission of an indirect cost proposal? 
    Most of the proposals received are handled out of Office of Cost Determination's National Office in Washington, D.C. Refer to our directory listing of this guide for more information.
  13. What can the submitting organizations do to help the Federal Cognizant Agency facilitate their review of an indirect cost rate proposal? 
    To avoid delays, organizations should submit complete proposals. If proposals are based on actual costs, they must reconcile to financial statements. If there are any questions concerning any aspect of the proposal, contact CPDD to resolve the issue prior to formal submission. Also, if during a prior negotiation you agreed to take corrective action(s) on any issues, you must disclose the status of your action(s). Finally, you must inform CPDD about all significant organizational or accounting changes and their impact. If these actions are taken, it could save time in getting the proposal negotiated.
  14. When a grantee/contractor is required by DOL to submit a closeout package prior to negotiating a final indirect cost rate, what is the procedure? 
    The grantee/contractor should prepare the closeout package using the approved provisional indirect cost rate and include a statement indicating that a provisional indirect cost rate was used pending negotiations of a final indirect cost rate. Upon receipt of a final indirect cost rate, the grantee/contractor must notify the applicable Federal funding agency of the final rate issued and request an amended final closeout adjustment. Refer to 2 CFR, Part 200, Subpart D, §200.344 and §200.345 for information on closeout and post-closeout adjustments and continuing responsibilities.
  15. What do we do if some grants/contracts do not provide for any indirect costs or provide for indirect cost rates that are lower than those established, provisional or final? 
    All indirect costs, using the approved rate, must be allocated to all grants/contracts regardless of any restrictions or funding limitations. Any allocable indirect costs that exceed any administrative or statutory restrictions on a specific federal grant/contract may not be shifted to other federal grants/contracts, unless specifically authorized by legislation. Non-federal revenue sources must be used to pay for these unrecovered costs. 

    Refer to 2 CFR Part 200, Subpart E, §200.414(c) for more details.
  16. Will DOL provide technical assistance to grantees/contractors in obtaining proper approval of the indirect cost rate from other federal agencies and state and local units of government? 
    Yes. Note that CPDD has a link to contact information from other federal cognizant agencies (FCAs) available at this link. Reiterating a prior Q&A, the federal agency providing most of the direct federal funding is the FCA for the grantee/contractor and they should negotiate and approve indirect costs for non-Federal entities. 

     
  17. Our grant with DOL totals $500,000 and includes a provisional indirect cost rate of 10%. Our actual, final indirect cost rate is 13%. Will DOL provide us with additional grant funds due to our higher indirect cost rate? 
    DOL could provide your organization with additional grant funds due to a higher final indirect cost rate than the established provisional rate subject to funds available. Also, a grant modification may be allowed to transfer budgeted direct costs to the indirect cost category due to the increased indirect costs. This would be subject to the terms and conditions of the grant agreement, e.g., approval of grant officer, indirect cost ceilings, and administrative cost limitations. 

    Contact your grant officer or grant officer technical representative for additional questions on this topic.
  18. In the event that a grantee/contractor does not exceed the total grant/contract but exceeds the ceiling placed on the indirect cost by DOL, can the excess indirect cost be recovered? 
    No. The ceiling on the indirect cost was included in the agreement to limit the amount of grant/contract funds used for indirect cost purposes by the grantee/contractor. This condition was known by the grantee/contractor before any grant/contract funds were expended.
  19. Can our indirect cost rate proposal be based only on federal funds since it only represents 15% of our total revenue? 
    No. Your indirect cost rate proposal must be accompanied by a schedule of costs incurred for all projects, federal and non-federal, and the amount of the proposed allocation base must tie-in with the applicable direct cost base for all projects.
  20. Can the audit costs under 2 CFR Part 200, Subpart F, be recovered? 
    Audit costs could be recovered as either direct or indirect costs in accordance with applicable cost principles and the benefits received concept. However, there is no special appropriation for audit costs. To recover audit costs, the organization must build them into the specific grant/contract documents (if direct) or into the overhead proposal (if indirect). 

    For more information on this topic, see 2 CFR, Part 200, Subpart F: §200.501 Audit requirements.