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Indirect Costs

Federal Indirect Cost Rate—Negotiated Agreements

If a Federal awarding agency has approved your indirect cost rate or allocation plan in the past, then another awarding agency may accept the same indirect cost rate or allocation plan, provided the rate or plan is 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:

  • Organizations with an approved indirect cost rate who are using total direct costs as the base usually exclude subawards in excess of $25,000 under awards and capital expenditures from any overhead recovery.
  • The negotiated agreement will stipulate that major subcontracts are excluded from the base for overhead recovery.