U.S. Department of Justice

Office of Community Oriented Policing Services

www.cops.usdoj.gov

March 2019 

 Fact Sheet

Indirect Cost Rate for FY 2019 Awards
 

COPS Office programs 

If you are requesting indirect costs under a COPS Office 

program that allows those costs, a copy of your agency’s 

most current, signed, federally approved Negotiated Indirect Cost Rate Agreement must be included with your 

application, or it must be noted in your budget narrative 

that you have never received an indirect cost rate. 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 agency requests indirect costs for a COPS Office 

award based on an expired rate, your agency 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 agency’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 benefited cost objectives on bases that 

will produce equitable results in consideration of relative 

benefits derived. 

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. 

What is an indirect cost rate proposal? 

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

§ 200.57 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 Assignment, 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. 
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Indirect Cost Rate for FY 2019 Awards

One-time extension allows your agency 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 current 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 

certain nonfederal entities that have never received a negotiated indirect cost rate to accept a flat rate of up to 10 

percent of modified total direct costs (MTDC). MTDC 

can include all direct salaries and wages, applicable 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 fellowships, 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 agency establish 

an indirect cost rate? 

If your agency does not have a previously established indirect cost rate, your agency can obtain a rate by contacting 

your agency’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. § 200.19 is the federal agency responsible for 

reviewing, 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 necessarily the same as the cognizant federal agency for audit. 

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

Assignment, and Rate Determination for Institutions 

of Higher Education (IHE), paragraph C.11 

For nonprofit organizations. Appendix IV to Part 

200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, paragraph C.2.a 

For state and local governments. Appendix V to Part 

200—State/Local Government and Indian Tribe-Wide 

Central Service Cost Allocation Plans, paragraph F.1 

For Indian tribes. Appendix VII to Part 200—States 

and Local Government and Indian Tribe Indirect Cost 

Proposal, paragraph D.1 

What should an agency do if its indirect 

cost rate expires or changes during the 

award period? 

If your agency’s approved indirect cost rate agreement 

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 agency 

must advise the COPS Office of any changes to its approved 

indirect cost rate during the award period and, if necessary, 

March 2019 
Indirect Cost Rate for FY 2019 Awards

3

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 agency 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 agency 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 agency 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 agency’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 agency 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 adjustment 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 budget 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 by 

the COPS Office Grant Monitoring Division. 

Therefore, recipients must adhere to proper accounting 

practices and recordkeeping to ensure all necessary documentation is available for review if requested by the COPS 

Office. Noncompliance may result in the repayment of misused funds, suspension of funds, or other remedial actions 

available by law until the noncompliance is resolved. 

Contact the COPS Office 

For more information about COPS Office 

programs and resources, please call the COPS 

Office Response Center at 800-421-6770 or visit 

the COPS Office website at www.cops.usdoj.gov. 

March 2019