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cost pool developed. The rate in each case should be stated as the percentage relationship <br />between the particular indirect cost pool and the distribution base identified with that pool. <br />4. Special indirect cost rates. <br />a. In some instances, a single indirect cost rate for all activities of a grantee department or <br />agency or for each major function of the agency may not be appropriate. It may not take into <br />account those different factors which may substantially affect the indirect costs applicable to a <br />particular program or group of programs. The factors may include the physical location of the <br />work, the level of administrative support required, the nature of the facilities or other resources <br />employed, the organizational arrangements used, or any combination thereof. When a particular <br />award is carried out in an environment which appears to generate a significantly different level <br />of indirect costs, provisions should be made for a separate indirect cost pool applicable to that <br />award. The separate indirect cost pool should be developed during the course of the regular <br />allocation process, and the separate indirect cost rate resulting therefrom should be used, <br />provided that: (1) the rate differs significantly from the rate which would have been developed <br />under subsections 2. and 3., and (2) the award to which the rate would apply is material in <br />amount. <br />b. Although this Circular adopts the concept of the full allocation of indirect costs, there are <br />some Federal statutes which restrict the reimbursement of certain indirect costs. Where such <br />restrictions exist, it may be necessary to develop a special rate for the affected award. Where a <br />"restricted rate" is required, the procedure for developing a non-restricted rate will be used <br />except for the additional step of the elimination from the indirect cost pool those costs for which <br />the law prohibits reimbursement. <br />D. Submission and Documentation of Proposals. <br />1. Submission of indirect cost rate proposals. <br />a. All departments or agencies of the governmental unit desiring to claim indirect costs under <br />Federal awards must prepare an indirect cost rate proposal and related documentation to support <br />those costs. The proposal and related documentation must be retained for audit in accordance <br />with the records retention requirements contained in the Common Rule. <br />b. A governmental unit for which a cognizant agency assignment has been specifically <br />designated must submit its indirect cost rate proposal to its cognizant agency. The Office of <br />Management and Budget (OMB) will periodically publish lists of governmental units identifying <br />the appropriate Federal cognizant agencies. The cognizant agency for all governmental units or <br />agencies not identified by OMB will be determined based on the Federal agency providing the <br />largest amount of Federal funds. In these cases, a governmental unit must develop an indirect <br />cost proposal in accordance with the requirements of this Circular and maintain the proposal and <br />related supporting documentation for audit. These governmental units are not required to submit <br />their proposals unless they are specifically requested to do so by the cognizant agency. Where a <br />local government only receives funds as a sub-recipient, the primary recipient will be responsible <br />for negotiating and/or monitoring the sub-recipient's plan. <br />54 <br /> <br />