Dispute Resolution and Appeals Procedures for Indirect Cost Rate Negotiation Decisions
The Interior Business Center’s Indirect Cost & Contract Audit Division (ICCAD) has established formal dispute resolution and appeals procedures to ensure a transparent, consistent, and equitable process for Non-Federal Entities (NFEs) that disagree with indirect cost rate negotiation decisions. This policy outlines a structured, tiered approach for resolving disagreements—from initial escalation through final agency review—while defining clear roles, documentation requirements, and timeframes at each stage. Aligned with 2 CFR 200, the framework enhances accountability and consistency in decision-making, strengthens internal controls, and provides NFEs with a clear and fair pathway to seek resolution or appeal of NICRA determinations.
Indirect Cost Rate Negotiation Backlog Update and Expectations Memo
We recognize negotiation start times are currently taking six months or longer due to reduced capacity and hiring constraints. Once your negotiation begins, timely, complete responses and well-supported submissions are essential to prevent additional delays. The memo also reinforces key Uniform Guidance expectations—costs must be allowable, reasonable, allocable, and adequately documented; indirect pools require a defensible allocability methodology; estimates must be supportable; and prior-year outcomes are not precedent where current-year support is insufficient.
We strongly recommend using the ICS templates and instructions available on Customer Central when preparing and submitting your proposal package.
15% De Minimis Rate
2 CFR200.414 (f) Recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 15 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. Federal agencies and pass-through entities may not require recipients and subrecipients to use a de minimis rate lower than the negotiated indirect cost rate or the rate elected pursuant to this subsection unless required by Federal statute or regulation. The de minimis rate must not be applied to cost reimbursement
contracts issued directly by the Federal Government in accordance with the FAR. Recipients and subrecipients are not required to use the de minimis rate. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate.
The use of de minimis rates does not require the review and approval of the cognizant agency for indirect costs. Therefore, Indirect Cost Services does not provide approval of de minimis rates.
Possible Rate Extensions
2 CFR 200.414 (g) recipient or subrecipient with a current Federal negotiated indirect cost rate may apply for a one-time extension of that agreement for up to four years. This extension will be subject to review and approval by the cognizant agency for indirect costs. If this extension is granted, the recipient or subrecipient may not request a rate review until the extension period ends. The recipient or subrecipient must re-apply to negotiate a new rate when the extension ends. After a new rate has been negotiated, the recipient or subrecipient may again apply for a one-time extension of the new rate in accordance with this paragraph.
Filing for Rate Extensions: Only final and predetermined rates may be eligible for consideration of rate extensions. Requests for rate extensions of a current rate will be reviewed on a case-by-case basis. Please send your request to our office indicating the rate and fiscal periods to be covered by the rate extension.
Please be advised that we cannot extend fixed with carryforward or provisional rate types. Refer to the COFAR FAQs for additional information.