negotiated indirect cost rate agreement (nicra)
TRANSCRIPT
Negotiated Indirect Cost Rate Agreements
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What is NICRA?
The purpose of an indirect cost rate agreement is to publish the
reimbursement rate(s) negotiated between the Federal
government and a grantee organization which reflects the
indirect costs (e.g.; facilities and administrative costs) and
fringe benefit expenses incurred by the organization in the
conduct of federal programs.
When is NICRA applied?
It is difficult for a Federal agency to determine the indirect
costs associated with conducting a program or project. The
indirect cost rate allows the grant or contract officer to calculate
the appropriate allocation of indirect costs associated with any
one project by applying the negotiated indirect cost rate to the
respective base used to develop the rate. This streamlines the
entire process.
Negotiated Indirect Cost Rate Agreements
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NICRA
Designation
Description When Renewed?*
Provisional A provisional rate is a temporary rate established for a given
period of time to permit funding, claiming, and reporting of
indirect costs pending establishment of a permanent rate for
that period. Typically for new grantees (like FAS)
Upon completion of
the grant period.
Final A final rate is a permanent rate established after an
organization’s actual costs for a current year are known. A
final rate is used to adjust indirect costs claimed based on a
provisional rate.
Typically annually
Predetermined A predetermined rate is a permanent rate established for a
specific future period based on a review of actual costs from a
preceding period. These rates are not subject to adjustment
except under very unusual circumstances.
Two to five years
Fixed A fixed rate has the same characteristics as a predetermined
rate; however, the difference between the costs used to
establish the fixed rate and the actual costs incurred during
the fiscal year covered by the fixed rate is classified as a
carry-forward. The carry-forward is used as an adjustment to
the current rate to allow the grantee to either recover under
recovery or pay back an over recovery in a subsequent year.
Fixed rates are often used to establish fringe benefit rates.
Two years, then
annually thereafter
*The renewals vary by cognizant agency reviewing the NICRA agreements, and these are not standardized across all agencies.
Negotiated Indirect Cost Rate Agreements
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New Omni Circular Guidance (for grants received after
December 26, 2014):
The OMB Guidance explicitly requires all Federal agencies to
reimburse a nonprofit’s indirect costs by applying the
nonprofit’s Federally negotiated indirect cost rate, if one already
exists. If a negotiated rate does not yet exist, then nonprofits
are empowered either to request negotiating a rate or to elect
the default rate of 10% of their modified total direct costs
(MTDC).
Negotiated Indirect Cost Rate Agreements
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How do you apply for a NICRA?
Each agency will provide guidance on how to establish NICRA
rates. In the case of FAS, the cognizant agency is the Office of
Naval Research.
Three basis for cost determination:
Simplified Allocation – small nonprofits
Direct Allocation – small nonprofits
Multiple Allocation – nonprofits with budgets over $10 million
in Federal funds
Acceptable distribution bases for the Simplified and Direct
Allocation methods include total direct costs (excluding capital
expenditures and other distorting items such as major
subcontracts/ subgrants); direct salaries and wages; or other
base which results in an equitable distribution of costs.
Negotiated Indirect Cost Rate Agreements
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NICRA Designation Required Submission Information
Provisional Schedule A: Statement of Indirect Costs and Calculation of
Indirect Rates for each rate proposed.
Schedule B: Reconciliation of Total Costs to Financial
Statements.
Schedule C: Statement of Fringe Benefits
Schedule D: Allocation of Salaries and Wages
Schedule E: Schedule of Federal Awards
Predetermined
Fixed
Final Schedules A-E
Schedule F: Schedule of Direct Costs by Award and applied
indirect expenses
Schedule G: Government Participation in Indirect Cost
Pools
Schedule H: Reconciliation of Total Payroll per accounting
records to IRS Form 941
Contact Information
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Rachel Werner, Owner and CEO
RBW Strategy, LLC
Ph: (301) 325-8552
Email: [email protected]
www.rbwstrategy.com