Cognizant Agency for Indirect Cost Allocation Plans/Indirect Cost Rate Proposals

This message is a reminder and clarification of the role of a cognizant agency with respect to the review of Indirect Cost Allocation Plan/Indirect Cost Rate Proposals (ICAP/ICRPs) and approval of indirect cost rates.  A cognizant agency is defined as the Federal agency with the largest dollar value of direct Federal awards with a governmental unit or component, as appropriate.

Title 2 Code of Federal Regulations (CFR) 200 Appendix VII D. 1. b.

A governmental department or agency (local agency) is required to submit their ICAP/ICRP to their cognizant agency if the local agency receives more than $35 million in direct federal funding.  If the local agency receives $35 million or less in direct federal funding, submission of their ICAP/ICRP is at the discretion of their cognizant agency.  In other words, cognizant agencies may approve ICAP/ICRPs without receiving the proposals.  In these instances, local agencies are still required to prepare and maintain their proposals.

If a local agency only receives federal funds that are passed-through Caltrans, then Caltrans is responsible for negotiating and monitoring  the local agency’s indirect costs as the pass-through entity.  As a result, Caltrans takes on the role of a cognizant agency, but it is not a cognizant agency. In these instances, Caltrans will be reviewing and  approving the local agency’s ICAP/ICRP. 

Title 2 CFR 200 Appendix VII E.

Indirect rates approved by the cognizant agency are to be accepted by all entities unless limited or prohibited by statute.  If the only federal funds received by a local agency are passed-through Caltrans, then rates approved by Caltrans are to be accepted by all entities. 

Title 2 CFR 200 Appendix V F. 1. And 2 CFR 200.513

Once identified, the cognizant agency will maintain  the cognizant agency role for five years as follows: FY 2018/19; FY 2023/24 ; and every fifth year afterwards.

Caltrans Local Assistance Procedures Manual Chapter 5.3

Any local agency seeking reimbursement of indirect costs must receive approval for the local agency’s ICAP/ICRP for the applicable fiscal years prior to billing Caltrans any indirect costs. 

If a local agency has an ICAP/ICRP approved by a federal cognizant agency, the local agency must provide Caltrans their ICAP/ICRP approval every fiscal year.

Examples of local agencies:

City, County, Town, Metropolitan Planning Organization, Regional Transportation Planning Agency, Tribe, Department, Unit.

In order to appropriately determine the cognizant agency, should there be one, local agencies are required to submit a report identifying all FY 2018/19 funding source(s) when submitting their ICAP/ICRP packages to ICAP-ICRP@dot.ca.gov

See additional guidance, checklists, and certifications under Indirect Cost Rate Proposal/Indirect Cost Allocation Plan at: https://ig.dot.ca.gov/resources