Grants Policy Issuance (GPI) 18-02 Indirect Cost Policy for EPA Assistance Agreements Regions 8 and 10 RTOC

CURRENT GRANT/IDC TIMELINE Interior Business Center (IBC) generally uses a 2-year fixed carryforward cycle. The FY 18 audit is used to negotiate the FY 20 IDC rate EPA grant process for FY 2020 is from March until mid-Sept, 2019 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22

CURRENT GRANT/IDC TIMELINE Interior Business Center (IBC) generally uses a 2-year fixed carryforward cycle. The FY 18 audit is used to negotiate the FY 20 IDC rate The average and median FY 18 audit is typically completed over 8 mos. after year end Over half of all audits are completed after the 8 mos EPA grant process for FY 2020 is from March until mid-Sept, 2019 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22

CURRENT GRANT/IDC TIMELINE Interior Business Center (IBC) generally uses a 2-year fixed carryforward cycle. The FY 18 audit is used to negotiate the FY 20 IDC rate The average and median FY 18 audit is typically completed over 8 mos. after year end Over half of all audits are completed after the 8 mos The IDC proposal is prepared using FY 18 audited figures; then submitted; then placed in IBC queue; then negotiated EPA grant process for FY 2020 is from March until mid-Sept, 2019 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22

Indirect Cost Policy Availability The Indirect Cost Policy for EPA Assistance Agreements (IDC Policy) and supporting resources are available on EPA’s Internet site at: Https://www.epa.gov/grants/rain-2018-g02 This training roughly follows the sections of the IDC Policy, by section number. An accompanying Recipient/Applicant Information Notice (RAIN 2018-G02) provides context for the IDC Policy, and a summary of the concepts that are likely to be of interest to EPA assistance agreement applicants and recipients. In addition to the IDC Policy, EPA’s OGD developed Indirect Cost Guidance for EPA Assistance Agreements that provides procedures and other helpful information. IDC Policy

1.0 Purpose This policy supersedes previous versions of EPA’s IDC policies, and: Aligns EPA’s requirements for indirect costs (IDCs) under EPA assistance agreements with 2 CFR Part 200 Provides additional EPA-specific information; and Includes roles and responsibilities for ensuring consistency and effective management of assistance agreements IDC Policy

2.0 Applicability & Effective Date The IDC Policy applies to financial assistance agreements (grants and cooperative agreements) awarded on or after October 1, 2018, including: New Agreements; Incremental amendments; Supplemental amendments; and No-cost amendments for rebudgeting This policy does not apply to subrecipients or procurement contractors under EPA assistance agreements. IDC Policy

3.0 Supersession This policy supercedes the following EPA IDC policies: GPI 12-01 Interim Approach for Indirect Cost Rates for EPA Tribal Grants. This policy was created prior to 2 CFR Part 200. IDC Policy

4.0 Background 2 CFR Part 200 became effective on December 26, 2014, and provided a new set of regulations for IDCs, including appendices for specific recipient types. Previous EPA policies were not consistent with the new regulations in some situations. This policy seeks to ensure that EPA and assistance agreement recipients are able to comply with the IDC regulations while detailing flexibility provided by the regulations. IDC Policy

6.0 Policy EPA applicants/recipients are not required to have and IDC rate, however for a recipient to be eligible to receive IDC, the following apply: IDCs must be included in the budget of the EPA Award, and The recipient must have an approved IDC rate. Without funds budgeted for IDCs and an approved IDC rate in place, recipients are not eligible to draw down IDCs. The IDC Policy and this training cover the different types of IDC rates that EPA considers “approved” for the purposes of this policy. IDC Policy

6.1 Approved Rate Types EPA considers the following to be approved rate types for tribes, and we will go through some of them later: Provisional; Final; Fixed rate with carry-forward; Predetermined 10% de minimis rate as detailed in Section 6.3; Extension of current or expired IDC rate by cognizant agency; Approved continued use of current or expired IDC rate by the Director of National Policy, Training, and Compliance Division (NPTCD) of OGD as detailed in section 6.4.1 IDC Policy

6.2 Proposed Rates You may have noticed that proposed rates are not in the list of approved rates on the previous slide. That’s because they have not been approved by the cognizant agency. Recipients are not to use EPA funds for IDCs until a rate has been approved. If a recipient has submitted a rate proposal to the cognizant agency and it has not yet been approved: Funds should be included for IDCs in the SF-424-A budget, and EPA will include IDCs in the budget of the grant award document… BUT!!! The EPA General Terms and Conditions will instruct recipients (as of October 1st, 2018) not to use EPA funds for IDCs until they have an approved IDC rate. IDC Policy

6.3 10% De Minimis Rate The 10 % de minimis rate is available for recipients that have never had an IDC rate. In addition, the IDC policy provides applicants/recipients the opportunity on a case-by- case basis to apply for a regulatory exception from the NPTCD of EPG’s OGD, if they have previously had an IDC rate, and wish to use the 10% de minimis rate. The IDC Guidance provides information on how to apply for exceptions. IDC Policy

6.4 Use of Expired IDC Rates Cognizant agencies can extend Final IDC rates up to four years, and when this happens, the IDC rate agreement will look like a regular current IDC rate agreement; however, cognizant agencies cannot extend: Fixed rates with carry-forward, and Provisional rates. While cognizant agencies cannot extend fixed rates with carry-forward, awarding agencies can allow recipients to continue using them. EPA may approve a regulatory exception on a case-by-case basis, to allow recipients to continue using fixed rates with carry-forward to up to four years past expiration. The rate should not be more than three years past expiration when applying for the regulatory exception. Provisional rates generally cannot be extended or used past expiration once an IDC rate cycle has been established. IDC Policy

6.5 Unrecovered IDCs and Cost-Share With EPA prior approval, recipients can use unrecovered IDC costs as cost-share or match, however this is only allowable for negotiated IDC rate types, as provided by 2 CFR Par 200.306(c). Unrecovered IDC costs cannot be used as cost-share or match for the following Tribal rate types, because these rate types are not considered negotiated; 10 % de minimis rate Expired fixed rate with carry-forward (even if the EPA has approved a regulatory exception). IDC Policy

6.6 Use of Lower Rate in Non-competitive Awards For non-competitive grants, applicants may elect to use rates that are lower than their negotiated IDC rates, without opting to use the unrecovered IDCs as cost- share. However, EPA must not require the use of a lower rate. When a recipient elects to use a rate lower than its negotiated rate, it may request that EPA allow it to apply the negotiated rate any time after the effective date for the negotiated rate. IDC Policy

6.7 IDCs and Competitive Awards Applicants may elect to use rates that are lower than their negotiated IDC rates for competitive purposes, but EPA should not suggest or require applicants to: Use unrecovered IDCs as voluntary cost-share, or Use a lower rate than the approved/negotiated rate. If an applicant opts to use one of the above options in a competitive grant, this becomes binding when the grant is awarded. IDC Policy

6.10 Repayment of Unallowable IDCs Recipients are responsible for repayment (or offset, if approved by an authorized EPA employee) of unallowable costs or overpayments based on adjustments to rate proposals or difference between provisional rates vs. final rates. Information on refunding IDC costs is available here: https://www.epa.gov/financial/makepayment IDC Policy

6.11 Closeout of Assistance Agreements without a Final IDC Rate Grants Management Officers can close out an award if the recipient does not yet have a final IDC rate. GMOs can: Complete all closeout actions after receipt and acceptance of all required final report (using provisional or fixed rates with carry-forward, if applicable), and Accommodate subsequent adjustments under 2 CFRR 200.344(a)(2). The policy provides further information on closing out grants with a provisional rate type, if the final rate is above or below the provisional rate. If a recipient does not have an IDC rate due to compliance concerns, the recipient is responsible for repaying EPA funds if IDCs were charged to the grant, unless the recipient obtains an approved rate that covers the time EPA was charged for IDCs. IDC Policy

9.0 Waivers and Regulatory Exceptions NPTCD has the authority to provide: Waivers to the IDC policy, and Regulatory exceptions to the parts of 2 CFR 200 that govern IDCs, on a case- by-case basis. IDC Policy

CURRENT GRANT/IDC TIMELINE Interior Business Center (IBC) generally uses a 2-year fixed carryforward cycle. The FY 18 audit is used to negotiate the FY 20 IDC rate The average and median FY 18 audit is typically completed over 8 mos. after year end Over half of all audits are completed after the 8 mos The IDC proposal is prepared using FY 18 audited figures; then submitted; then placed in IBC queue; then negotiated EPA grant process for FY 2020 is from March until mid-Sept, 2019 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22

3-YEAR GRANT/IDC TIMELINE IBC may consider a 3-year fixed carryforward cycle. If the FY 18 audit is used to negotiate the FY 21 IDC rate The aerage and median FY 18 audit is typically completed over 8 mos. after year end Over half of all audits are completed after the 8 mos The IDC proposal is prepared using FY 18 audited figures; then submitted; then placed in IBC queue; then negotiated EPA FY 2021 grant process is from March until mid-Sept, 2020 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22

Questions on GPI 18-02: Indirect Cost Policy? If you have questions or need further information or clarification on this policy, please contact your Grants Specialists or one of the following: Julie Milazzo at 415-972-3687 or Milazzo.julie@epa.gov Laurice Jones at 202-564-0223 or Jones.Laurice@epa.gov IDC Policy