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3.11 Indirect Costs

Establishment of Indirect Cost Rates

In order to be reimbursed for indirect costs, you must first establish an appropriate indirect cost rate.

  • To do this, you must prepare an indirect cost rate proposal and submit it to your cognizant Federal agency.
  • Instructions on how to prepare an indirect cost rate proposal are available in the Indirect Costs resource document [PDF - 32 Kb] at the Office of Justice Programs (OJP): Funding Resources web page.

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There is an exception: If you are a local unit of government, you are not required to submit an indirect rate cost agreement. However, you are required to retain your cost allocation plan on file for review.

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Generally, if an indirect cost proposal is not submitted within 90 days after the award date, indirect costs may not  be recovered for the period prior to submission of the proposal.

  • To support the indirect cost proposal, as an award recipient you are responsible for ensuring that independent audits of your organization are conducted in accordance with existing Federal auditing and reporting standards set forth in OMB Circular A-133. A copy of the audit report must be submitted to your cognizant Federal agency to support the indirect cost proposal.
  • As part of requesting an indirect cost rate, you must submit with your indirect cost allocation plan a signed certification stating that the plan only includes allowable costs.
  • Additional guidance for completing an indirect cost proposal as an award recipient, as well as examples of how certain information should be provided, is available through the U.S. Department of Health and Human Services (HHS) Program Support Center website.

After negotiations, your cognizant Federal agency will establish either a provisional, final, or fixed-with-carry-forward indirect cost rate, depending on the cost principles that apply to your type of organization.