Indirect costs are those that have been incurred for common or joint purposes. These costs benefit more than one cost objective and cannot be readily identified with a particular final cost objective without effort disproportionate to the results achieved. After direct costs have been determined and assigned directly to federal awards and other activities as appropriate, indirect costs are those remaining to be allocated to benefited cost objectives. A cost may not be allocated to a federal award as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to a federal award as a direct cost.

Indirect costs are normally charged to federal awards by the use of an indirect cost rate. A separate indirect cost rate is usually necessary for each department or agency of the governmental unit claiming indirect costs under federal awards.

For additional information, refer to .

Allowable indirect costs, as defined in the regulations, shall be reimbursed at a negotiated predetermined fixed rate to agencies that have submitted to TRF-BTS a federally approved Indirect Cost Rate Plan and Approval Letter.

TRF-BTS requires that subgrantees approved by TxDOT to receive indirect costs provide annually a current Indirect Cost Rate Plan from the cognizant agency stating the negotiated Indirect Cost Rate (IDCR). Approved IDCRs are good until amended. If TRF-BTS wishes to reimburse an agency or any other subgrantee, governmental or nonprofit organization which otherwise cannot obtain an IDCR Agreement, it would have to negotiate and/or monitor the subgrantee’s plan. If this is the case, TRF-BTS will partner with TxDOT’s Compliance Division (CMP) to review the IDCR Agreement and make recommendations for approval. TRF-BTS will then negotiate and approve the IDCR Plan proposed by a subgrantee.

TRF-BTS shall establish annually a list of all subgrantees approved to charge indirect costs through a current IDCR, and monitor the list to determine that all required IDCRs and letters are current and maintained with the TRF-BTS files. TRF-BTS shall ensure that claims received from subgrantees, which include indirect costs, are determined to be charged accurately.

(formerly OMB Circular A-21,

Cost Principles for Education Institutions

), is the federal regulation that provides additional guidance on IDCRs for universities. Universities are allowed to apply the IDCR to a broader range of costs as specifically identified in the regulation and referred to as “modified total direct costs.” The modified total direct costs, referred to as “Facilities and Administration (F&A) Costs,” may include all salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships and fellowships, as well as the portion of each subgrant and subcontract in excess of $25,000, must be

excluded

from modified total direct costs. Other items may only be excluded where necessary to avoid a serious inequity in the distribution of F&A costs.

, Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, uses similar language:

"However, a cost may not be assigned to an award as a direct cost if any other cost incurred for the same purpose, in like circumstance, has been allocated to an award as an indirect cost.”