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Indirect Cost Resources

Insular Areas, State, and Local Governments Frequently Asked Questions

Our FAQs provide information on frequent questions or concerns. If you have questions about specific topics not included here, please contact us


The cognizant agency for negotiating indirect cost rates shall be the federal agency that provides the majority of the federal funding (per OMB guidance).

Interior Business Center's Indirect Cost Services is the federal cognizant agency designated by OMB to negotiate indirect cost rates for:

  • All Indian tribal governments and their component units (component units are legally separate organizations for which the elected officials of the primary government are financially accountable)

  • Insular area governments (such as Guam, America Samoa)

  • Nonprofit, state, and local entities that receive a majority of their federal funding from the Department of the Interior

On January 6, 1986 Federal Register, OMB published a list of cognizant agency assignments for state and local governments. To date, this list has not been revised.

An indirect cost rate is a device for determining, in a reasonable manner, the proportion of indirect costs each program should bear. It is the ratio (expressed as a percentage) of the indirect costs to a direct cost base. Indirect costs are grouped into a common pool and then distributed to individual federal awards by the use of the indirect cost rate. Once negotiated by Indirect Cost Services, an indirect cost rate will be accepted and used by all federal agencies unless prohibited by statute - so that an organization can use the negotiated rate for new programs/grants from all federal agencies.

In contrast, a cost allocation plan (CAP) is a document that explains an organization's methodology in identifying, accumulating, and allocating allowable costs to its all departments and agencies. Some federal agencies still require an approved indirect cost rate even though a CAP has already been approved.

IBC has created sample proposal formats, checklists, and templates to assist you in completing the ICP and CAP proposals. Please select the appropriate sample proposal for your type of organization (i.e., Insular Areas, State, and Local Governments). Although it is not required that you follow our ICP or CAP format, we encourage you to follow as much as possible because doing so will expedite our review process since our format will contain the information we needed to process the proposals. Even if you do not follow our format, please ensure that all of the items on our checklist are provided.

For state entities that receive federal aid apportionment through the Department of Interior, Fish and Wildlife Service's Wildlife Restoration Act (PR) and Sport Fish Restoration Act (DJ), there are restrictions placed on the expenditure of indirect costs in relation to these funds.

Specifically, 50 CFR Ch.1, Part 80.15 (d) requires that "administrative costs in the form of overhead or indirect costs for state central services [SWCAP/CSCAP] outside of the state fish and wildlife agency must be in accord with an approved cost allocation plan and shall not exceed three percentum (3%) of the annual apportionment."

Indirect Cost Services has created a sample 3% limitation verification schedule and working template for your convenience. If your entity receives PR/DJ funding, Indirect Cost Services requires a submission of the 3% limitation verification schedule and related support.

We require the entire SWCAP agreement to ensure the SWCAP amount has been reviewed and approved by the Department of Health and Human Services. 2 CFR Part 200 Appendix VII, Section D.1.d states that the SWCAP must be based on the latest Federally-approved central service cost allocation plan.

Sometimes the proposed central service cost allocation plan for the period being negotiated has not been approved by the time the indirect cost rate proposal is submitted. In that case, the indirect cost proposal may be prepared with an amount for central services that is based on the latest federally approved central service cost allocation plan (See 2 CFR Part 200, Appendix VII, Section D.1.d).

The difference between these central service amounts - and the amounts ultimately approved - will be compensated for by an adjustment in a subsequent period. Please contact Indirect Cost Services Division for an example demonstrating how the adjustment will be made.

In lieu of the comprehensive audited financial statements, you can submit a copy of the general ledger instead. However, we do not need the entire run, we just need the last page from the accounting system showing the total expenditure. The negotiator may request for more detail reports from the accounting system if deemed necessary during the desk review.

We need the SEFA schedule to verify the majority federal funder to ensure we are the federal agency to negotiate your organization's indirect cost rate. If there has been a permanent shift in federal funding that DOI will no longer be your majority federal funder, you need to inform our office as quickly as possible so we can refer you to the correct federal agency to negotiate your indirect cost rate.


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