TITLE 44: GOVERNMENTAL CONTRACTS, GRANTMAKING, PROCUREMENT AND PROPERTY MANAGEMENT
SUBTITLE F: GRANTMAKING
CHAPTER I: GOVERNOR'S OFFICE OF MANAGEMENT AND BUDGET
PART 7000 GRANT ACCOUNTABILITY AND TRANSPARENCY ACT
SECTION 7000.420 CENTRALIZED INDIRECT COST RATE NEGOTIATION


 

Section 7000.420  Centralized Indirect Cost Rate Negotiation

 

This Subpart applies to State grantmaking agencies, State awardees receiving awards from State and federal pass-through funds.  With permission from the federal government, Illinois has centralized the negotiation and election of indirect cost rates with State and federal pass-through awardees.

 

a)         The State of Illinois' Indirect Cost Rate Negotiator will support the negotiation of indirect cost rates and/or cost rate elections.  A User Guide for the centralized indirect cost rate negotiation system is provided in the GATA Resource Library to support State agency and awardee use of the system.

 

b)         Requirements for State Grantmaking Agencies

 

1)         Illinois shall utilize the centralized Indirect Cost Rate System.  This system will be used by awardees to make an annual indirect cost rate election or negotiate a rate with the State of Illinois pursuant to one of the following options.  Options for indirect cost rate election or negotiation include:

 

A)        If eligible, election of the de minimis rate of 10% modified total direct costs (MTDC) allowed by UR section 200.414(f);

 

B)        If applicable, submit a copy of the current federal Negotiated Indirect Cost Rate Agreement (NICRA);

 

C)        Election of "no rate", meaning the awardee will not request or receive reimbursement for any indirect costs; or

 

D)        Negotiate a rate with the State of Illinois.  

 

2)         All approved elections and negotiated rates shall be recorded in the State Staff Inquiry Screen for State agency reference.

 

3)         Once a rate is negotiated or an election accepted, all State grantmaking agencies are required to accept the approved rate, unless an exception has been granted by GATU requiring a lower rate or limitation on the amount charged.

 

4)         The awardee may volunteer to accept a lower indirect cost rate on an award.  State agencies shall not force or coerce an awardee to take a lower rate.

 

c)         Requirements for State Cognizant Agencies

 

1)         The assigned SCA is required to review and, if appropriate, accept the negotiated rate or election of its awardee.  Acceptance must be recorded in the Illinois' centralized Indirect Cost Rate System. 

 

2)         The SCA shall provide technical support to its assigned awardees during the indirect cost rate negotiation/election process. 

 

3)         On a case-by-case basis, the State of Illinois Indirect Cost Rate Negotiator shall determine if the submitted indirect cost rate proposal is complete for negotiation. Independence issues require the Negotiator to be separated from proposal development.  If the submitted proposal is not complete, the Negotiator shall notify the SCA and the awardee.

 

4)         If the submitted proposal is not complete and the Indirect Cost Rate Negotiator cannot proceed with a rate negotiation, the SCA shall review the awardee's proposal submitted in the centralized Indirect Cost Rate System and provide additional technical assistance to the awardee or notify GATU that additional technical support may be necessary. 

 

5)         If, after receiving additional assistance from the SCA and GATU, it is determined that an awardee lacks the capacity to prepare a complete proposal in compliance with federal cost principles, a final determination notification will be sent to the awardee.  The final determination notification must include the reasons why the proposal did not meet the minimum requirements and recommend the awardee seek professional assistance in order to proceed with a future State negotiated indirect cost rate proposal. The recommendation may also include alternatives to a State negotiated rate, such as the election of the 10% de minimis rate, if eligible.

 

A)        If issues appear to be close to resolution, GATU may allow additional technical assistance to be offered by the Negotiator; or

 

B)        GATU may concur with the SCA.  If so, GATU and the SCA shall notify the awardee that professional assistance is required to complete the negotiation process.

 

d)         Requirements for an Organization Receiving a State or Federal Pass-through Funded Award

 

1)         Annually, each organization receiving an award from a State grantmaking agency is required to enter the centralized Indirect Cost Rate System and make one of the following elections for indirect costs to State and federal pass-through grants:

 

A)        Federal Negotiated Indirect Cost Rate Agreement (NICRA);

 

B)        Election of the de minimis rate of 10% of MTDC;

 

C)        Election not to charge indirect costs; or

 

D)        Negotiation of an indirect cost rate.

 

2)         The awardee shall make one election or negotiate one rate that all State agencies must accept unless there are federal or State program limitations, caps or supplanting issues.

 

3)         The accepted election or negotiated rate shall be recorded in the Grantee Portal and the State Staff Inquiry Screen.

 

4)         The awardee may volunteer to accept a lower indirect cost rate on an award.  State agencies are not allowed to force or coerce an awardee to take a lower rate.

 

5)         Awardees that fail to make an election or negotiate a rate in the centralized Indirect Cost Rate System will not be allowed to charge indirect costs to awards.  Any indirect costs previously reimbursed during the corresponding grant period without making an election may be credited against future payments.

 

e)         Requirements for Local Education Agencies (LEAs)

 

1)         Based upon the U.S. Department of Education delegation agreement with the State of Illinois, the Illinois State Board of Education (ISBE) has authority to develop indirect cost rates for LEAs.  The indirect cost rates developed by ISBE for the LEAs shall apply for all State and federal pass-through awards issued by State agencies to the LEAs.

 

2)         LEA indirect cost rates will be posted centrally by GOMB in the State Staff Inquiry Screen.  LEAs are not required to enter information into the centralized Indirect Cost Rate System (see subsection (b)(1)).

 

f)         Requirements for Local Governments

 

1)         Based on how the local government registers (in accordance with Section 7000.220), the local governmental department or agency unit shall make an indirect cost rate election or negotiate a rate with the State through the Indirect Cost Rate System. If the governmental department or agency unit registers separately, for example, each governmental department or agency unit would negotiate or make a separate indirect cost rate election.

 

A)        Local governments can negotiate one indirect cost rate that will cover all governmental departments or agency units; or

 

B)        Local governments can negotiate an indirect cost rate per individual governmental department or agency unit. 

 

2)         If a governmental department or agency unit receives more than $35 million in direct federal funding, it must submit an indirect cost rate proposal to its federal cognizant agency.  The State of Illinois cannot negotiate an indirect cost rate for local governmental departments or agency units receiving more than $35 million in direct federal funding.

 

A)        If the governmental department or agency unit chooses not to negotiate a rate with its federal cognizant agency, no indirect costs can be reimbursed. 

 

B)        If the federal cognizant agency will only negotiate a rate for its administered programs, the local government shall request an exception from GATU.

 

3)         If the local governmental department or agency unit receives less than $35 million in direct federal funding, it must submit an indirect cost rate proposal to the State of Illinois' centralized Indirect Cost Rate System.

 

A)        Per UR appendix VII, these governmental departments or agency units must develop an indirect cost proposal in accordance with this subsection (f) and maintain the proposal and related supporting documentation for audit and monitoring. 

 

B)        These proposals shall be submitted to the State of Illinois for review and monitoring.  The proposals are not required to be submitted to the federal cognizant agency for indirect costs.

 

C)        The State of Illinois is required to monitor the rate.  Monitoring includes reviewing the allocation methodology for reasonableness and to ensure no unallowable costs are included in the rate methodology.

 

4)         If a local governmental department or agency unit does not receive direct federal funding, it must submit an indirect cost rate proposal through the centralized Indirect Cost Rate System.

 

5)         All local governments that utilize a central service cost allocation plan must submit this plan in conjunction with an indirect cost rate proposal.

 

g)         Requirements for Nonprofits

 

1)         Nonprofits that receive direct federal funding must negotiate an indirect cost rate with their federal cognizant agency.

 

A)        If the nonprofit chooses not to negotiate a rate with its federal cognizant agency, no indirect costs can be reimbursed.

 

B)        If the federal cognizant agency will only negotiate a rate for its administered programs, the nonprofit shall request an exception from GATU.

 

2)         The State of Illinois cannot negotiate an indirect cost rate for nonprofits that receive direct federal funding.

 

h)         Retention of Indirect Cost Rate Proposals and Central Service Cost Allocation Plans

This subsection applies to the following types of documents and their supporting records: indirect cost rate computations or proposals, central service cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates).

 

1)         If Submitted for Negotiation

If the proposal, plan or other computation is required to form the basis for negotiation of the rate, the 3-year retention period for the supporting record starts from the date of that submission.

 

2)         If Not Submitted for Negotiation

If the proposal, plan or other computation is not required for negotiation purposes, the 3-year retention period for the proposal, plan or computation and its supporting records starts from the end of the fiscal year (or other accounting period) covered by the proposal, plan or other computation.