The Indirect Cost Agreement serves as a critical document for organizations receiving federal funding in the United States. It establishes the framework for recovering indirect costs (overhead) associated with federal programs, grants, and contracts. Organizations typically negotiate these agreements with their cognizant federal agency to ensure consistent treatment of indirect costs across all federal awards. The agreement includes detailed calculations, methodologies, and approved rates that comply with federal regulations and cost principles. It provides clarity and certainty for both the organization and federal agencies regarding the treatment of indirect costs.
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1. Parties: Identification of the organization and the federal agency/cognizant agency
2. Background: Context of the agreement and basis for indirect cost calculations
3. Definitions: Key terms including indirect costs, direct costs, base period, etc.
4. Rate Agreement: Specified indirect cost rates and their application
5. Period of Applicability: Timeframe during which the rates are valid
6. Treatment of Fringe Benefits: How fringe benefits are handled in calculations
7. Rate Types: Specification of provisional, predetermined, fixed, or final rates
1. Special Remarks: Additional provisions or clarifications specific to unique circumstances or exceptions
2. Equipment Usage: Treatment of equipment-related costs when significant equipment costs are involved
3. Treatment of Paid Absences: How vacation, holiday, sick leave are handled when organization has specific absence policies
1. Rate Computation Schedule: Detailed calculations supporting the indirect cost rates
2. Cost Groupings Schedule: Breakdown of costs into various indirect cost pools
3. Allocation Base Schedule: Documentation of the selected allocation base(s)
4. Organization Chart: Showing departmental structure and cost centers
5. Certificate of Indirect Costs: Required certification of the indirect cost proposal
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