Illinois Administrative Code › Title 35 - ENVIRONMENTAL PROTECTION › Part 360 - GENERAL CONDITIONS OF STATE OF ILLINOIS GRANTS FOR SEWAGE TREATMENT WORKS UNDER THE ANTI-POLLUTION BOND ACT OF 1970 › Subpart H - REQUIREMENTS APPLICABLE TO PAYMENT OF GRANTS › Appendix D - Procedures for Determination of Indirect Costs and Indirect Cost Rates

Current through Register Vol. 48, No. 28, July 12, 2024
1. Definition:
Indirect costs are those costs incurred for a
				  common or joint purpose but benefiting more than one cost objective, and not
				  readily identifiable to the cost objectives specifically benefited. The term
				  indirect cost, as used herein, applies to costs of this type occurring in the
				  grantee department (or other relevant organizational unit responsible for
				  project performance), as well as those central service support costs incurred
				  by other departments in supplying goods, services, and facilities to the
				  grantee department when such cost can be assigned to the departmental indirect
				  cost pool as a result of an approved cost allocation plan.
2. General:
(A) Indirect costs of the grantee shall be
				  allowable in accordance with an indirect cost agreement incorporated in the
				  grant agreement. Indirect cost rates and indirect costs as determined below
				  shall be used in the grant agreement but shall be considered to be estimates;
				  the final amount of eligible indirect costs will be based on audited actual
				  costs.
(B) Indirect cost rates are not retroactive and
				  may not be changed during the period of the grant agreement.
(C) No indirect costs are allowable for
				  reimbursement grants.
(D) The grantee must secure approval of the Agency
				  of its proposed indirect cost rate in advance of its acceptance of a Step 3
				  grant.
3. Grantees with Existing USEPA Construction Grants:
(A) If the grantee has a current grant from the
				  U.S. Environmental Protection Agency (USEPA) for construction of a sewage
				  treatment works, the most recently established indirect cost rate in that grant
				  will be used by the Agency, provided that:
(1) the rate was approved by the lead federal
				  agency; and
(2) procedures established in Federal Management
				  Circulars 73-6 and 74-4 were followed in determining the rate; and
(3) the indirect cost rate in the USEPA grant was
				  negotiated in accordance with the requirements of 40 CFR 30.715 -2.
(B) If the grantee has a current grant from USEPA
				  for the construction of treatment works which shows a zero indirect cost rate
				  or which specifies that there is not indirect cost rate, it is not eligible to
				  establish an indirect cost rate for a state grant.
(C) If the grantee is claiming prior cost
				  involving force account work, the indirect cost associated with such work may
				  be computed from an applicable USEPA construction grant made to the same
				  grantee and in effect during the period of time in which the force account work
				  was incurred.
(D) To establish an indirect cost rate under this
				  section, the Agency will require:
(1) copies of all executed grants currently in
				  effect between the grantee and USEPA, certified by the clerk or other
				  appropriate official of the grantee;
(2) a letter from an appropriate official of the
				  grantee, authorizing representatives of the Agency to have access to the
				  federal audit which served as the basis of the indirect cost rate in the USEPA
				  grants.
(E) If the grantee has more than one currently
				  effective USEPA construction grant with differing indirect cost rates, the
				  Agency will determine which of the federally approved indirect cost rates is
				  most appropriate for use on the state grant project.
4. Grantee without Existing USEPA Construction Grants:
For grantees which do not have existing current
				  USEPA construction grants, either of the following procedures may be used to
				  establish an indirect cost rate:
(A) A negotiated lump sum for overhead may be
				  established, based on the grantee's submission of evidence of estimated charges
				  to be incurred. The provisions of 40 CFR 30.715-2(b) will be used as guidance
				  in establishing such a lump sum. Lump sum indirect costs negotiated under this
				  provision may not exceed one percent of the total project cost.
(B) A negotiated indirect cost rate may be
				  established, in the manner described in 40 CFR 30.715-2(a), in accordance with
				  either of the following procedures:
(1) For projects whose total estimated project
				  cost is less than $10 million, the grantee shall follow the Agency's criteria
				  for use in determining eligibility of specific items used in establishing an
				  indirect cost rate, submit the completed indirect cost rate determination to
				  the Agency with substantiation, and provide a certification from an appropriate
				  official of the grantee that the information submitted is, to the best of its
				  knowledge, true and accurate. Under this section, total indirect costs may not
				  exceed five percent of the total estimated project cost.
(2) For projects with a total project cost of more
				  than $10 million, the grantee may propose an indirect cost rate, with
				  substantiation and justification, to the Agency. The Agency will review the
				  submitted information in accordance with guidance provided by Federal
				  Management Circulars 74-4 and 73-6 and procedures described in 40 CFR 30 - 715
				  - 2(a).
5. Disputes:
The grantee will be notified of Agency approval or
				  disapproval of a proposed indirect cost rate. If the Agency disapproves the
				  proposed rate, its reasons for disapproval shall be stated, together with a
				  more appropriate method of determination. If the grantee does not accept the
				  Agency's determination of a more appropriate method, it may contest it pursuant
				  to the provisions of General Condition 9, Disputes, of these general
				  conditions.