U.S. Department of Justice

Office of Community Oriented Policing Services

 Fact Sheet cops.usdoj.gov

Indirect Cost Rate for FY 2023 Awards

COPS Office programs

If you are requesting indirect costs under a COPS Office 

program that allows those costs, a copy of your organiza-

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tion's most current, signed, federally approved Negotiated 

Indirect Cost Rate Agreement (NICRA) must be included 

with your application, or it must be noted in your budget 

narrative that you have never received an indirect cost rate. 

(NICRAs must be from a federal agency. NICRAs issued by 

state or regional entities will not be recognized.) If the rate 

agreement is expired at the time of application, you should 

submit documentation demonstrating that the rate is under 

review by your cognizant federal agency.

If your organization requests indirect costs for a COPS 

Office award based on an expired rate, your organization 

may not draw down funding for indirect costs until the 

current approved rate agreement or an approved extension 

is submitted to the COPS Office.

In addition, if your organization's rate agreement expires or 

changes during the award period, you must submit the new 

rate agreement or approved one-time extension from your 

cognizant federal agency to the COPS Office.

What are indirect costs?

Indirect (facilities & administrative [F&A]) costs are costs 

incurred for a common or joint purpose benefiting more 

than one cost objective. They are not readily attributable 

to the cost objectives that are being benefited. To facilitate 

equitable distribution of indirect expenses to the specific cost 

objectives, it may be necessary to establish a number of pools 

of indirect (F&A) costs. Indirect (F&A) cost pools must 

be distributed to benefit cost objectives on bases that will 

produce equitable results in consideration of relative benefits 

derived.

What is an indirect cost rate proposal?

An indirect cost rate proposal as defined in 2 C.F.R. 

§ 200.1 is the documentation prepared by a nonfederal 

entity to support its request for the establishment of an 

indirect cost rate, as described in appendix III to 2 C.F.R. 

Part 200, Indirect (F&A) Costs Identification and Assign

ment, and Rate Determination for Institutions of Higher 

Education (IHE), through appendix VII to 2 C.F.R. Part 

200, States and Local Government and Indian Tribe 

Indirect Cost Proposals.

There are several types of indirect cost rates:

	Final rate is applicable to a specified past period that is 

based on the actual costs of the period. A final audited 

rate is not subject to adjustment.

	Fixed rate has the same characteristics as a predetermined 

rate (q.v.) except that the difference between estimated 

costs and actual allowable costs of the covered period is 

carried forward as an adjustment for a future period.

September 2023

Indirect (facilities & administrative [F&A]) costs 

are costs incurred for a common or joint purpose 

benefiting more than one cost objective. They are 

not readily attributable to the cost objectives that 

are being benefited.
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Indirect Cost Rate for FY 2023 Awards Fact Sheet

September 2023

	One-time extension allows your organization to apply 

for a one-time extension of a negotiated indirect (F&A) 

cost rate. The negotiated cost rate may be extended for 

up to four years. Once your cognizant federal agency has 

approved an extension for indirect costs, you must abide 

by the rate for the agreed-upon time period. No further 

negotiations regarding indirect costs may occur until the 

extension has expired. At the end of the extension period, 

you must negotiate a new indirect cost rate.

	Predetermined rate is applicable to a specified cur-

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The 

rent or future period and is not subject to adjustment. A 

predetermined rate may be used where there is reasonable 

assurance that the rate is not likely to exceed a rate based 

on the agency’s actual costs. Predetermined rates may not 

be used by governmental units that have not submitted 

and negotiated the rate with the cognizant federal agency.

	Provisional rate is a temporary rate applicable to a 

specified time period that is used for funding, interim 

reimbursement, and reporting of indirect costs pending 

establishment of a final rate for that period.

	De minimis indirect cost rate provides the option for 

nonfederal entities that do not have a current negotiated 

or provisional rate (except for those nonfederal entities 

described in appendix VII to 2 C.F.R. Part 200, paragraph 

D.1.b) to elect a flat rate of 10 percent of modified total 

direct costs (MTDC), which may be used indefinitely. 

No documentation is required for the 10 percent flat rate. 

MTDC can include all direct salaries and wages, applica

ble fringe benefits, materials and supplies, services, travel, 

and up to the first $25,000 of each subaward (regardless 

of the period of performance of the subawards under the 

award). MTDC excludes equipment, capital expenditures, 

rental costs, tuition remission, scholarships and fellow

ships, participant support costs, and the portion of each 

subaward in excess of $25,000. Other items may only be 

excluded when necessary to avoid a serious inequity in the 

distribution of indirect costs and with the approval of the 

cognizant federal agency for indirect costs.

How does an organization establish 

an indirect cost rate?

If your organization does not have a previously established 

indirect cost rate, your organization can obtain a rate by 

contacting your organization's cognizant federal agency, 

which will review all documentation and approve a rate 

for the covered time period. For more information on the 

requirements for development and submission of indirect (F&A) cost rate proposals, please refer to 2 C.F.R. § 

200.414(e) and appendices III–VII to 2 C.F.R. Part 200.

What is a cognizant federal agency?

Cognizant federal agency for indirect costs as defined in 

2 C.F.R. § 200.1 is the federal agency responsible for review

ing, negotiation, and approving cost allocation plans or 

indirect cost proposals on behalf of all federal agencies. The 

cognizant federal agency for indirect cost is not necessar

ily the same as the cognizant federal agency for audit. 

COPS Office is not a cognizant federal agency. For nonprofit, state, local, and Tribal Governments your cognizant 

federal agency is generally the federal agency that provides 

your organization with the most federal financial assistance. 

For assignments of cognizant federal agencies, 

see the following:

	For institutions of higher education. Appendix III to 

2 C.F.R. Part 200—Indirect (F&A) Costs Identification 

and Assignment, and Rate Determination for Institutions 

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of Higher Education (IHE), paragraph C.11

	For nonprofit organizations. Appendix IV to 2 C.F.R. 

Part 200—Indirect (F&A) Costs Identification and 

Assignment, and Rate Determination for Nonprofit Orga

nizations, paragraph C.2.a

	For state and local governments. Appendix V to 2 

C.F.R. Part 200—State/Local Government and Indian 

Tribe-Wide Central Service Cost Allocation Plans, para

graph F.1

	For Indian tribes. Appendix VII to 2 C.F.R. Part 200—

States and Local Government and Indian Tribe Indirect 

Cost Proposal, paragraph D.1
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What should an organization do if its indirect 

cost rate expires or changes during the 

award period?

If your organization's approved indirect cost rate agree-

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ment expires during the award period, a current approved 

rate agreement must be obtained from the cognizant federal 

agency and submitted to the COPS Office. The organiza

tion must advise the COPS Office of any changes to its 

approved indirect cost rate during the award period and, if 

necessary, request a budget modification that reflects the rate 

change. Please contact your COPS Office Grant Program 

Specialist or Program Manager to determine when a budget 

modification is necessary.

If the organization experiences an increase or a decrease in 

its indirect cost rate, it should submit the new rate to the 

COPS Office within 30 days of the change.

Can an organization reprogram indirect costs 

to direct costs?

Reprogramming requests of indirect costs to direct costs 

are administered through the budget modification process 

for the specific COPS Office award that your organization 

received. Please contact your COPS Office Grant Program 

Specialist or Program Manager to obtain guidance on any 

additional requirements that may apply to your modification 

request. The COPS Office will then evaluate your request 

and notify you in writing of our decision.

Please be advised that if your organization's revised indirect 

cost rate is lower than the rate approved at the time of award 

and a formal budget modification was not approved, excess 

indirect cost rate funds should not be drawn down and will 

be deobligated at closeout.

What should an organization expect at 

the end of the award period regarding its 

indirect cost rate?

If a provisional indirect cost rate is in effect at award 

closeout, the recipient shall proceed with closeout but 

will complete an expenditure analysis upon receipt of the 

approved final indirect cost rate to determine if an adjust

ment is necessary. If the recipient drew down excess COPS 

Office funding for indirect costs, the recipient must return 

the overpayment to the COPS Office and submit a revised 

Federal Financial Report (SF-425). If the recipient incurred 

additional indirect costs, the recipient may request a bud

get modification if the award is still open and award funds 

are available. If the recipient returns or draws down COPS 

Office funding, the recipient will need to submit a revised 

final Federal Financial Report (SF-425).

Other important factors

To support the indirect cost rate agreement, recipients are 

responsible for ensuring independent audits are conducted 

in accordance with existing federal auditing and reporting 

standards set forth in 2 C.F.R. Part 200, Subpart F—Audit 

Requirements. A copy of the audit report must be submitted 

to the cognizant federal agency to support the indirect cost 

rate agreement.

In accordance with ensuring proper award management and 

use of funding awarded through the COPS Office, recipients 

may be selected for a site visit or an enhanced office-based 

grant review (EOBGR) or may need to address an alleged 

noncompliance complaint during a compliance review.

Therefore, recipients must adhere to proper accounting 

practices and recordkeeping to ensure all necessary docu

mentation is available for review if requested by the COPS 

Office. Noncompliance may result in the repayment of mis

used funds, suspension of funds, or other remedial actions 

available by law until the noncompliance is resolved.

Indirect Cost Rate for FY 2023 Awards Fact Sheet

Contact the COPS Office

For more information about COPS Office programs 

and resources, please contact the COPS Office 

Response Center at AskCOPSRC@usdoj.gov or 

800-421-6770 or visit the COPS Office website at 

https://cops.usdoj.gov.

September 2023