A new FAQ is out for the overall regulations for spending of federal grant funds — Uniform Guidance found in 2 CFR 200 (and mirrors the regs from our HHS funder at 45 CFR 75 which have not yet been updated). You can find the full text here, where over 140 questions are addressed, but let’s look at a few key ones over the next few posts.
Modified Total Direct Costs
Q-114. If a non-Federal entity’s last negotiated indirect cost rate was 9 percent MTDC, and the rate has since expired, can the organization elect to use the de minimis rate going forward? Yes. Please inform your cognizant agency for indirect costs that you will be switching to the de minimis rate and will not be submitting indirect cost proposals for future years. Negotiated provisional rates and fixed rates need to be resolved and the carry-forward for the last year of the fixed-rate will need to be resolved with the cognizant agency for indirect costs.
Q-115. Does a non-Federal entity using the de minimis rate need to provide documentation to substantiate its costs? No. The de minimis rate was designed to reduce burden for small non-Federal entities. The non-Federal entity must report in its SEFA whether it elected to use the de minimis rate for its Federal awards. See §§ 200.414(f) and 200.510.
Q-116. If the subaward is made up of several individual funding agreements, does each individual subaward require including up to $25,000 in the MTDC base? The allowance of $25,000 is for one time during the period of performance of each individual subaward.
Q-117. Is the MTDC applied to the first $25,000 for an award’s period of performance or is it applied to each year of a multi-year agreement? The allowance of $25,000 is for one time during the period of performance of each individual subaward.
Q-118. Can a pass-through entity that paid actual or negotiated indirect costs to a subrecipient later impose the 10 percent de minimis rate on future subawards to the same subrecipient? The 10 percent de minimis rate is for non-Federal entities that do not have a current negotiated indirect cost rate (including provisional).
•If a pass-through entity paid negotiated or actual indirect costs to a specific subrecipient in the past, they should continue to negotiate and award indirect costs to that subrecipient in accordance with their prior practice.
•If a pass-through entity does not have a current awarded or negotiated actual indirect costs with that subrecipient, then the pass-through entity can provide the 10 percent de minimis rate or negotiate a rate with that subrecipient.
Q-119. Can a Federal awarding agency or pass-through entity restrict recipients or subrecipients use of indirect costs to the de minimis rate? No. Federal awarding agencies and pass-through entities must recognize a federally approved negotiated indirect cost rate. (NOTE from McElwee: This may be useful when the DSE as the pass-through entity doesn’t want you (as the subrecipient for Part B/ILS funding, to use your approved federal rate.)
Q-120. If a non-Federal entity allows its negotiated indirect cost rate to expire, is it eligible to request the de minimis rate? Yes. Please inform your cognizant agency for indirect costs that you will be switching to the de minimis rate and will not be submitting indirect cost proposals for future years. Negotiated provisional rates and fixed rates need to be resolved and the carry-forward for the last year of the fixed-rate will need to be resolved with the cognizant agency for indirect costs.
Q-121. If an organization elects to use the de minimis rate at the beginning of an award, is it applicable to the award’s entire period of performance? The de minimis rate may not be applicable during the entire period of performance of an award. If a non-Federal entity elects to negotiate an indirect cost rate and the negotiated rate begins prior to the end of an award’s period of performance, they may apply the negotiated rate to the award. The non-Federal entity should inform their Federal awarding agency or pass-through entity of the change prior to incurring costs on the award. Federal awarding agencies and pass-through entities are not required to reissue awards issued prior to the effective date of the indirect cost negotiation agreement. In fact, Federal agencies must use the IHEs’ negotiated rates in effect at the time of the initial award throughout the life of the Federal award.2 Accordingly, the de minimis rate may be applicable to the period of performance of the award if the total award amount is known and made available to the organization at the time of award.
Q-122. Can a recipient conducting a single function, funded predominately by Federal awards, elect to charge the de minimis rate if they currently only charge direct costs to their awards? No. If all costs are charged directly to the Federal award (e.g., space costs, utility and administrative costs), the recipient must not also charge the de minimis rate. Costs must be consistently charged as either indirect or direct cost, and may not be double-charged or inconsistently charge