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Division of Cost Determination (DCD) – Office of Acquisition Management Services


Frequently Asked Questions

1. Question: How do I get a copy of the Indirect Cost Guide?
Answer: "A Guide to Indirect Cost Determination" is available on the DOL website at:
http://www.dol.gov/oasam/boc/dcd/np-comm-guide.htm.


2. Question: Who needs an indirect cost rate?
Answer: Any organization being awarded cost reimbursable grants and contracts, also having more than one source of funding (including direct Federal funding), needs an indirect cost rate.


3. Question: Why do I need an indirect cost rate?
Answer: Your organization needs an indirect cost rate for: management information, to be in compliance with Federal regulations, e.g. OMB Circular A-122, A-87, A-21, or the FAR (whichever applies), close-out purposes, and for audit documentation.


4. Question: What is an indirect cost rate?
Answer: An indirect cost rate is a percentage (indirect cost pool/direct cost base) used to distribute indirect costs to all cost centers benefiting from those costs.


5. Question: Which agency should approve my indirect cost rate(s) and issue a Negotiation Agreement?
Answer: Your cognizant agency is responsible for negotiating your indirect cost rate and issuing the appropriate Negotiation Agreement. Unless specifically assigned by OMB, the Federal agency with the preponderance of direct funding is normally your cognizant agency.


6. Question: What documentation is required as part of the provisional (based on budgetary costs) or final (based on incurred costs) indirect cost rate proposal?
Answer: Please refer to Section II (PDF), Page 4, of the Guide of Indirect Cost Rate Determination.


7. Question: How many days do I have to submit a provisional (based on budgetary information) indirect cost rate proposal – 1st time?
All organizations must submit their initial indirect cost rate proposal to their cognizant agency within 90 days of receiving a cost reimbursable grant/contract award. OMB Circular A-122, Attachment A, E.2.b., for example, states the following:
"A non-profit organization which has not previously established an indirect cost rate with a Federal agency shall submit its initial indirect cost proposal immediately after the organization is advised that an award will be made and, in no event, later than three months after the effective date of the award."


8. Question: How many days do I have to submit a final (based on incurred costs) indirect cost rate proposal?
All organizations must submit their final indirect cost rate proposals within 180 days of the end of your organization's fiscal year. OMB Circular A-122, Attachment A, E.2.c., for example, states the following:
"Organizations that have previously established indirect cost rates must submit a new indirect cost proposal to the cognizant agency within six months after the close of each fiscal year."


9. Question: For how long do I need to submit annual indirect cost rate proposals based on incurred costs?
Answer: For the life of the cost reimbursable contract/grant period. For example: You receive a three-year grant award (July 1, 2009 through July 1, 2012). Your fiscal year ends on December 31st.
Based on the above example, your organization would need to submit final incurred cost proposals for the organizations' fiscal year ending (FYE):

  • 12/31/2009
  • 12/31/2010
  • 12/31/2011
  • 12/31/2012

10. Question: How many days does it takes my Federal cognizant agency to process my indirect cost rate proposal?
The DOL's Division of Cost Determination (DCD) typically issues indirect cost rate agreements within 120 days of proposal receipt pending no unforeseen negotiation issues.


11. What is the correct DOL address for submission of an indirect cost proposal?
Answer: Please refer to the Division of Cost Determination directory. (PDF)