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3.11 Indirect Costs

Federal Indirect Cost Rate—Negotiated Agreements

If a Federal awarding agency has approved your indirect cost rate or allocation plan in the recent past, then another awarding agency may accept the same indirect cost rate or allocation plan, provided the rate or plan is current and based on allocation methods substantially in accord with those set forth in the applicable cost circulars.

Where the approved provisional indirect cost rate is lower than the actual indirect cost rate incurred, you may not charge expenses included in overhead pools (e.g., accounting services, legal services, building occupancy and maintenance) as direct costs.

Exclusion of some subawards or subcontracts from overhead recovery:

  • $25,000 Subcontract/Subaward Limitation:  For Educational Institutions and Non-Profit Organizations, indirect cost rates negotiated on the basis of modified total direct costs may only be applied against the first $25,000 of any subcontract or subaward under the agreement. This limitation must be applied to all related subcontracts and subawards. A subcontract or subaward is any agreement under which the awardee outsources work, goods, or services. (2 C.F.R. part 220 (Educational Institutions, formerly Circular A-21), Appendix A, G(2) and 2 C.F.R. part 230 (Non-Profit Organizations, formerly Circular A-122), Appendix A, D(3)(f)).   
  • Participant Support Costs:  For Non-Profit Organizations, in accordance with 2 C.F.R. part 230, Appendix A, D(2)(C), participant support costs are generally excluded from the distribution base.  “The distribution base may be total direct costs (excluding capital expenditures and other distorting items, such as major subcontracts or subgrants), direct salaries and wages, or other base which results in an equitable distribution. The distribution base shall generally exclude participant support costs as defined in paragraph 32 of Appendix B.{in 2 CFR 230}”   Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia, or training projects.  This exclusion applies to the entirety of any subcontracts for the lodging and travel of conference participants or trainees (but not employees).