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Frequently Asked Questions

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What consitutes approval by the Federal awarding agency of an NFE's use of the 10% de minimis rate?

Typically, the NFE informs the Federal awarding agency in the application proposal of its eligibility and intent to charge the de minimis rate. Barring any statutory or regulatory restrictions, the Federal awarding agency must approve the use of the de minimis rate.

Does the non-Federal entity have to submit documentation supporting that their indirect costs are at least 10% of its MTDC to be charged to the award?

No. There is no requirement for the NFE to provide documentation showing that its indirect costs are at least 10% of its MTDC, although they are required to maintain appropriate documentation of all allowable costs charged to the award per 2 CFR 200.403 Factors affecting allowability of costs.

Are State fish and wildlife agencies eligible to charge the 10% de minimis rate for indirect costs?

Yes.  As long as the State fish and wildlife agency has never had an indirect cost rate approved by its cognizant Federal agency and it meets the requirements established under Appendix VII to Part 200—States and Local Government and Indian Tribe Indirect Cost Proposals.

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Which non-Federal entities cannot charge the 10% de minimis rate for indirect costs?

Non-Federal entities that have previously had an approved indirect cost rate are not eligible to use the 10% de minimis rate.  Additionally, 2 CFR 200 Appendix VII (D) outlines two basic groups of entities that are not allowed to charge the 10% de minimis rate for indirect:(1) 

1. A governmental department or agency unit that annually receives more than $35 million in direct Federal funding must submit its indirect cost rate proposal to its cognizant agency for indirect costs; or

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1. Those governmental departments or agency units that are not required to submit their indirect cost rate proposals to their cognizant agency for indirect costs.  Such entities must still develop an indirect cost proposal in accordance with the requirements under 2 CFR 200 and maintain the proposal and related supporting documentation for audit.  Examples of such departments or agencies are those whose cognizant federal agency is Health and Human Services (HHS).  In some situations, HHS may allow a governmental department or agency to develop their indirect cost rate proposal, but not require them to submit it for approval.  The reason for this is that HHS does not have the resources or capacity to review and approve all the indirect cost rate proposals from all of its different grantees.  In these cases, the governmental department or agency must still develop and document their indirect cost rate and be able to provide it to auditors if needed.

Is the 10% de minimis rate option available for subrecipients?

Yes. Prime recipients who subaward some or all of the Federal award to eligible subrecipients must approve either the 10% de minimis rate, or negotiate an indirect rate with the subrecipient, in lieu of a Federally-negotiated indirect cost rate. see 2 CFR 200.331(a)(4).

Do FEMA funds count towards the $35 million annual Federal funding criteria for using the 10% de minimis rate?

Yes.  FEMA funds are considered Federal funds.

How do I determine if my State fish and wildlife agency has ever had an approved indirect cost rate?

Typically the budget office would have record of the State fish and wildlife agencies approved indirect cost rate.  If not, the State fish and wildlife agency could consult with the WSFR Regional Office.  Additionally, the Interior Business Center would also be able to inform the State fish and wildlife agency if they have ever had an approved indirect cost rate.

Towards which types of indirect base can you apply the 10% de minimis rate?

2 CFR 200.414(f) states that an eligible non-Federal entity who elects to charge the 10% de minimis rate may only apply the rate to their MTDC.  The MTDC as a base removes "distorting items" (e.g. capital expenditures, contracts, and subgrants).  Non-Federal entities are allowed to charge the 10% de minimis to the first $25,000 of its subgrants and contracts.

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