Indirect Cost Rate Agreement Hhs

Indirect Cost Rate Agreement with HHS: What You Need to Know

If you`re a business or organization that receives federal funding from the Department of Health and Human Services (HHS), it`s important to understand the concept of indirect cost rate agreement. This agreement determines the percentage of indirect costs that can be charged to HHS grants, contracts, and agreements.

Indirect costs are expenses that are not directly related to a specific project or program, but are necessary for the operation of the organization as a whole. These can include rent, utilities, administrative salaries, and other overhead expenses. In order to ensure that these indirect costs are covered, HHS requires organizations to negotiate an indirect cost rate agreement.

The process of negotiating an indirect cost rate agreement can be complex, but it`s essential for organizations to understand the terms and requirements. Here are some key things to keep in mind:

1. Determining the indirect cost rate: There are different methods for calculating the indirect cost rate, but the most common is the Modified Total Direct Cost (MTDC) method. This method excludes certain direct costs, such as equipment and capital expenditures, from the calculation so that the rate is based only on the remaining expenses.

2. Negotiating the rate: Once the method is determined, the organization must negotiate with HHS to establish the rate. This rate is typically valid for a period of two to four years, after which it must be renegotiated.

3. Communicating the rate: The agreed-upon rate must be communicated to all relevant stakeholders, including program managers, fiscal staff, and auditors. It`s important to ensure that everyone understands the rate and how it applies to specific grants and contracts.

4. Monitoring and reporting: Once the rate is established, the organization must track and report its indirect costs on an ongoing basis. This includes maintaining accurate records of expenses and submitting regular reports to HHS.

Negotiating an indirect cost rate agreement with HHS can be a time-consuming process, but it`s essential for organizations that rely on federal funding. By understanding the basics of this agreement and following the requirements for negotiation, communication, and monitoring, organizations can ensure that their indirect costs are covered and that they remain in compliance with HHS regulations.