Indirect Costs

Follow this process for the establishment of Indirect Cost rates prior to submission of an application:

When NIFA is not the cognizant federal agency

The applicant should use the current negotiated indirect cost rate established by its cognizant federal agency (the agency that provides the most funds).  If awarded, the applicant will be required to produce a negotiated indirect cost rate agreement from the cognizant agency in order to recover indirect costs.  Applicants may request (i.e., budget) indirect costs using the lesser of: (a) the negotiated rate; or (b) the maximum statutory rate stated in the Request for Application, if any.  If unable to obtain a negotiated rate from its cognizant agency, the applicant is not permitted indirect cost reimbursement.  Rather, the applicant may only be reimbursed for allowable direct costs.  Violation of cost accounting principles is not permitted when re-budgeting or charging costs to awards.  Rather, costs must be consistently charged as either indirect or direct costs.

Effective 12/26/2014, applicants new to federal awards, and applicants who have never received a negotiated rate, may request a 10% de minimus indirect cost rate.  If awarded, and the cognizant agency has not provided a negotiated rate, the awardee can receive the 10% de minimus indirect cost rate.  The 10% de minimus rate should be applied to modified total direct costs (MTDC).  MTDC means total direct costs related to the award, such as direct labor, fringe benefits, materials and supplies, publications, consultant services and travel costs.  MTDC excludes the following costs:  equipment, capital expenditures, participant support costs and the portion of each subaward and subcontract in excess of $25,000.  The 10% de minimus rate is only available to awards made on or after 12/26/2014.  Violation of cost accounting principles is not permitted when charging costs to awards.  Rather, costs must be consistently charged as either indirect or direct costs.

If the cognizant agency issues a negotiated rate subsequent to award, the negotiated rate may not be retroactively applied.

When NIFA is the cognizant federal agency

If the applicant does not have a negotiated rate, and NIFA is the cognizant agency, the applicant must calculate an indirect cost rate in order to request indirect costs. Several sample indirect cost rate calculations are provided below. During the application process, the applicant is not required to complete the entire indirect cost package identified on NIFA’s website.   Rather, the applicant need only calculate an indirect cost rate to serve as a basis for requesting indirect costs.  If awarded, the applicant will be required to submit a complete Indirect Cost Proposal (ICP) package as explained on NIFA’s indirect cost website.

Effective 12/26/2014, applicants new to federal awards, and applicants who have never received a negotiated rate, may elect to forgo calculation of an indirect cost rate during the application process and request a 10% de minimus indirect cost rate.  If awarded, a complete ICP package is required to establish a negotiated rate as explained above.  However, an awardee may elect to forgo pursuit of a negotiated rate and receive the 10% de minimus indirect cost rate.  The 10% de minimus rate should be applied to modified total direct costs (MTDC).  MTDC means total direct costs related to the award, such as direct labor, fringe benefits, materials and supplies, publications, consultant services and travel costs.  MTDC excludes the following costs:  equipment, capital expenditures, participant support costs and the portion of each subaward and subcontract in excess of $25,000.  The 10% de minimus rate is only available to awards made on or after 12/26/2014.  Violation of cost accounting principles is not permitted when charging costs to awards.  Rather, costs must be consistently charged as either indirect or direct costs.

The awardee may request a negotiated rate subsequent to award.  If so, NIFA will revisit its cognizant agency responsibilities.  If cognizant, NIFA will establish a negotiated rate.  The negotiated rate may not be retroactively applied.

Nonprofit Organizations

 Commercial, For-Profit Companies

Once completed, the applicant should identify the calculated percentage rate in the space allotted for item H of the budget sheet. The applicant should also identify the direct cost budget categories to which it applies the rate (i.e., the base) in the space allotted for item H of the budget sheet.  Applicants may request indirect costs using the lesser of: (a) the calculated rate; or (b) the maximum statutory rate stated in the Request for Application, if any. If selected for funding, NIFA will require the applicant to provide its indirect cost calculation (and a complete ICP package) to support requested indirect costs. The applicant should NOT submit its ICP package as part of its award application. However, during the application process, the applicant may submit general questions to IndirectCostInquiries@nifa.usda.gov.

Waived Indirect Costs.  An applicant may elect not to request recovery of indirect costs.  If so, the applicant should write “None Requested” in this space.

If application is selected for award:

NIFA will request the grantee’s ICP package and begin the negotiation process in order to establish a negotiated indirect cost rate. The grantee should submit a complete ICP package to RecipientsICPs@nifa.usda.gov. Note that NIFA may issue the award, but withhold funds budgeted for indirect costs pending completion of the indirect cost rate negotiation process.  Upon completion of the negotiation process, NIFA will notify the grantee if a modification to the grant budget is necessary.