Indirect cost rate determination is crucial for organizations receiving federal funding. Understanding the guidelines and procedures ensures compliance and accurate reimbursement. This guide provides a comprehensive overview of indirect cost rate determination, focusing on requirements for submitting proposals to the U.S. Department of Labor (DOL).
Understanding Indirect Cost Proposals
Indirect cost proposals outline how an organization allocates costs that cannot be directly tied to a specific project or program but are necessary for its overall operation. These costs can include administrative salaries, rent, utilities, and depreciation. The process involves determining a rate that fairly distributes these costs across all projects, including those funded by the federal government.
Indirect cost proposals must adhere to established cost principles. Nonprofit organizations must comply with 2 CFR Part 200, Appendix IV, while commercial organizations should follow FAR Part 31.2. When the DOL provides the majority of direct federal funds to an organization, it typically serves as the Federal cognizant agency, with the Cost & Price Determination Division overseeing proposal review and approval.
Submitting an Indirect Cost Proposal
For New Customers
If you’re a new customer needing to submit an indirect cost proposal to the DOL, here’s a step-by-step guide:
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Review the Indirect Cost Guide: Familiarize yourself with the comprehensive guide and checklist. This guide details the requirements for preparing your proposal and includes a list of necessary supporting documentation.
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Complete the Checklist: The checklist available at Indirect Cost Rate Checklist provides a clear outline of all the documents you must provide. Ensure that you have compiled all the required information before submitting your proposal.
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Prepare Electronic Files: Organize your supporting documentation into separate electronic files that correspond with the items on the checklist. This makes it easier for the reviewers to navigate and assess your proposal.
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Submit Your Proposal: Email your proposal and any questions to [email protected]. The subject line should clearly indicate that it’s an indirect cost proposal.
For Current Customers
If you’re a current customer with an assigned cost negotiator, follow these steps to submit your indirect cost proposal:
- Locate Your Cost Negotiator: Find your cost negotiator’s email address at CPDD Contact Information.
- Prepare Your Proposal: Compile your indirect cost proposal and supporting documents, ensuring all requirements are met. Utilize the provided checklist to confirm that all necessary documentation has been included.
- Submit Your Proposal: Email your proposal directly to your assigned cost negotiator. Include any questions you may have regarding the proposal.
Important Deadlines
Adhering to deadlines is crucial for a smooth review process. Here are the key deadlines for submitting indirect cost proposals:
- Initial Proposals: New organizations seeking provisional/billing rates must submit their initial indirect cost proposals within 90 days after the effective date of the Federal award.
- Renewal Proposals: Organizations with previously established indirect cost rates must submit a new indirect cost proposal within six months after the close of each fiscal year.
Financial Schedules and Documentation
Financial schedules included in the proposal (item #2 in the checklist) should be submitted in one Microsoft Excel workbook (or similar). This allows for easier review and analysis of the data. Examples of financial schedules can be found based on Section III of the indirect cost guide at Financial Schedule Examples. However, it’s crucial to customize these schedules based on your organization’s financial records.
Key Considerations for Financial Schedules:
- Accuracy: The content of the schedules must be based on your organization’s own records, such as the chart of accounts (e.g., Exhibit D).
- Verification: Ensure all applicable formulas within the document are correct and verified.
- Consistency: Maintain consistency between the schedules and the supporting documentation.
Additional Resources
To further enhance your understanding of the indirect cost proposal process, refer to this presentation: A guide with respect to Indirect Costs. This resource provides additional insights into the principles and procedures involved.
Conclusion
Navigating the indirect cost rate determination process requires attention to detail and adherence to established guidelines. By understanding the requirements, following the outlined steps, and utilizing available resources, organizations can ensure compliance and secure the necessary funding to support their operations. Submitting a well-prepared and accurate indirect cost proposal is essential for maintaining a strong financial relationship with the U.S. Department of Labor.
