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Chapters:

3.6 Costs Requiring Prior Approval

Listing of Costs Requiring Prior Approval

Jump to Section:
Automatic Data Processing Equipment and Software
Criminal Justice Information and Communication Systems
Equipment and Other Capital Expenditures
Pre-Agreement Costs
Proposal Costs
Consultant Rates
Interest Expense
Foreign Travel
Indirect Costs
Moving Money between Categories
Confidential Funds

Automatic Data Processing Equipment and Software

You may request to purchase Automatic Data Processing (ADP) equipment; however, the application must be written in a manner consistent with maximum, open, free, and fair competition in the procurement of hardware and services.

You should not specify brand names when such ADP equipment includes the following types and requirements:

  • Digital, analog, or hybrid computer equipment and automated fingerprint equipment
  • Auxiliary or accessorial equipment, such as data communications terminals, source data automation recording equipment (e.g., optical character recognition equipment and other data acquisition devices), and data output equipment (e.g., digital plotters, computer output microfilms) to be used in support of digital, analog, or hybrid computer equipment, whether cable-connected, wire-connected, radio-connected, or self-standing, and whether selected or acquired with a computer or separately
  • Data transmission or communications equipment that is selected and acquired solely or primarily for use with a configuration of ADP equipment that includes a computer
  • Qualification and exclusions:
  • Analog computers are covered only when being used as support or assistance to a digital computer.
  • Items of ADP equipment that are (a) physically incorporated in a weapon or (b) manufactured under a development contract are excluded from the above definition.
  • Accessories, such as tape cleaners, tape testers, magnetic tapes, paper tapes, disk packs, or anything similar are also excluded.

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Criminal Justice Information and Communication Systems

You should arrange for design and programming of Criminal Justice Information and Communication Systems (CJICS) to maximize the use of standard and readily available computer equipment and programs. Identification of such systems will be made on a case-by-case basis.

  • Any recipient interested in development of a CJICS should utilize the past experience of other agencies that have successfully implemented such systems.
  • A detailed requirements analysis and a search for existing software that could meet the identified requirements must be performed before new software is developed.
  • If new software is developed, it must be designed and documented so that other criminal justice agencies will be able to use it with minor modifications and at minimum cost.
  • As a recipient or subrecipient, you must request approval prior to arranging for patent of computer software and programs.
  • You do not have to obtain prior approval for the lease or rental of such equipment. However, you should have documentation that the total lease or rental amount that is greater than $100,000 is obtained in accordance with Federal procurement standards.
  • If the amount of the acquisition exceeds $150,000, prior approval from the awarding agency is required for the outright purchase, lease-purchase agreement, or other method of purchase.
  • The request for ADP equipment must be in writing and the awarding agency must certify that the procurement is consistent with the following requirements:
  • The equipment is of the type identified within the award applications, and it is necessary and sufficient to meet the project goals;
  • The ADP equipment procurement is in compliance with existing Federal agency, State, and local laws and regulations;
  • A purchase/lease comparison has been conducted demonstrating that it is more advantageous to purchase rather than lease the ADP equipment under consideration;
  • If software development is involved, it has been demonstrated that computer software already produced and available will not meet the needs of the award; and
  • If the ADP equipment procurement is to be sole source and that procurement is more than $150,000, then documentation must have been submitted to justify the action.

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Equipment and Other Capital Expenditures

If as a recipient or subrecipient you have received prior approval for expenditures for equipment and other capital assets, including repairs which materially increase the useful life of equipment, then these expenditures are allowable.

  • If you do not fully justify the expenditures for equipment in your budget and budget narrative, the awarding agency may require that the type, quantity estimated, unit, or other information be provided before the final budget can be issued.
  • In reviewing equipment acquisition budgets and proposals, the following principles should be followed:
  • No other equipment owned by the recipient/subrecipient is suitable for the project;
  • No luxury vehicles will be approved;
  • If the vehicle request is approved, the vehicle should be reasonable, and the recipients must follow the Internal Revenue Service guidelines;
  • If the vehicle(s) was purchased as part of a unit of government fleet by the State or local central procurement activities, it is generally accepted as reasonable;
  • Federal funds are not used to provide reimbursement for the purchase of equipment already owned by the recipient/subrecipient; and
  • Equipment purchased and used commonly for two or more programs should be appropriately divided among each activity.
  • An expenditure for equipment purchased for a common pool is generally allowable as a charge to the award at cost value.
  • Equipment that has already been purchased and charged to other activities of the organization is not an allowable expense to the award.

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Pre-Agreement Costs

Prior approval is required for pre-agreement costs.

  • Block/Formula Funds. Costs incurred prior to the date of the award period may be charged to the project when the award recipient specifically requests support for
    pre-agreement costs. States may approve pre-agreement costs for subrecipients if incurred after the beginning of the Federal fiscal year of the award.
  • Discretionary Awards. Costs incurred prior to the start date of the award may be charged to the project only if the award recipient receives written prior approval from the awarding agency.

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Proposal Costs

Costs to projects for preparing proposals for potential Federal awards require written prior approval from the awarding agency.

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Consultant Rates

Compensation for individual consultant services is to be reasonable and consistent with that paid for similar services in the marketplace.

  • Each grant-making agency periodically establishes a consultant rate maximum limit.
  • Effective June 1, 2014, the OJP consultant rate maximum limit is $650 per day or $81.25 per hour.
  • This limit is specified in the terms and special conditions of the award.
  • When the rate exceeds the limit for an 8-hour day, or a proportionate hourly rate (excluding travel and subsistence costs), a written prior approval is required from the awarding agency. Prior approval requests require additional justification.
  • An 8-hour day may include preparation, evaluation, and travel time in addition to the time required for actual performance.
  • Please note, however, that this does not mean that the rate can or should be the maximum limit for all consultants.
  • Consultants who are contracted through a competitive bidding process (not sole source) are not subject to the maximum consultant rate threshold.
  • Those consultants who have been hired without a competitive bidding process are subject to the maximum consultant rate threshold.
  • Rates will be reviewed on a case-by-case basis.
  • In order to calculate a rate of compensation for consultants associated with and employed by educational institutions, divide the total compensation projected for 12 months ┬áby 260.
  • If the resulting rate of compensation exceeds the maximum consultant rate established by the grant-making agency, written prior approval must be obtained.
  • Compensation for consultants employed by State and local government will only be allowed when the unit of government will not provide these services without cost.
  • If a State or local government employee has been contracted to provide services that are related to his or her employment with the State or local government, the rate of compensation is not to exceed the daily salary rate for the employee paid by the unit of government.
  • If the State or local government employee has been contracted to provide services that are unrelated to his or her employment with the State or local government, then the rate of compensation is based on the necessary and reasonable cost principles which cannot exceed the maximum rate allowed by the awarding agency without prior written approval.

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Interest Expense

This expense includes all interest on debt incurred for the following:

  • Acquisition of equipment and buildings
  • Building construction
  • Fabrication
  • Reconstruction
  • Remodeling (allowable with prior approval)
  • This interest applies only to buildings completed on or after October 1, 1980 for State and local units of government, and September 29, 1995 for nonprofit organizations.

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Foreign Travel

Foreign travel is defined as any travel outside of Mexico, Canada, and the United States and its Territories and possessions. However, for organizations located in foreign countries, foreign travel means:

  • Each separate foreign trip must be pre-approved.
  • Direct charges for foreign travel costs are not allowable unless the travel has prior approval from the awarding agency.
  • Indirect charges for foreign travel are allowable without prior approval from the awarding agency when they are included as part of a federally approved indirect cost rate and have a beneficial relationship to the project.

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Indirect Costs

Transferring funds into or out of the indirect cost category is not allowable without prior approval from the Office of Justice Programs. A budget modification is required as indicated in Chapter 3.5: Adjustments to Awards. A copy of the current approved indirect cost agreement from your Cognizant Federal Agency must be attached.

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Moving Money between Categories

Moving monies into any budget category with a zero dollar amount is not allowable without prior approval from the awarding agency. A budget modification is required.

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Confidential Funds

Confidential funds are subject to prior approval.

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