Common Questions

1. How do I know which federal agency is my cognizant agency?
   1. Your cognizant agency for negotiating indirect cost rates is the federal agency that provides the majority of your federal funding (2 CFR part 200, App VII, sec. F).
   2. EDA is the federal cognizant agency for all Economic Development Districts (EDDs), unless another federal agency has assumed that responsibility.
   3. If you have never received federal funding, you would ask your first federal funder for direction on this question.
2. What is the difference between an indirect cost rate and a cost allocation plan?
   1. An indirect cost rate is a device for determining, in a reasonable manner, the proportion of indirect costs each program should bear. It is the ratio (expressed as a percentage) of the indirect costs to a direct cost base. Indirect costs are grouped into a common pool and then distributed to individual federal awards by the use of the indirect cost rate. Once negotiated by your cognizant agency, an indirect cost rate will be accepted and used by all federal agencies unless prohibited by statute or regulation – so that an organization can use the negotiated rate for new programs/grants from all federal agencies.
   2. In contrast, a cost allocation plan (CAP) is a document that explains an organization's methodology in identifying, accumulating, and allocating general or centralized costs to its constituent departments and agencies. These costs are then included in individual departments’ and agencies’ indirect costs. See 2 C.F.R. §200.416.
3. When should I submit my indirect cost rate proposal for negotiation?
   1. Submission Timeframes for Indirect Cost Proposals
      1. The indirect cost proposal is due annually and must be submitted within six months following fiscal year closeout. Some examples:
         1. If your fiscal year ends on September 30, your indirect cost proposal is due by March 31
         2. If your fiscal year ends on December 31, your indirect cost proposal is due by June 30
         3. If your fiscal year ends on June 30, your indirect cost proposal is due by December 31
   2. Please be advised that neither EDA nor DOI solicits proposals. Proposals are processed on a first-in, first-out basis.