OJP webinar: How grantees calculate and recover indirect costs, and how to submit a proposal

Crystal Towson, a supervisor in the Office of the Chief Financial Officer, Grants Financial Management Division at the Office of Justice Programs, opened an OJP webinar that walked grantees through which costs are direct and which are indirect and how to recover those costs in federal budgets. Towson said the session would be interactive and that participants should use the chat for knowledge checks and questions.

Towson defined direct costs as expenses “easily identifiable” and specific to a grant, such as program salaries or testing kits. By contrast, she said, “Now your indirect costs is totally opposite than that,” describing rent, shared accounting services and other organization-level costs that support multiple awards and therefore are allocated across grants. She used examples to show that an item’s classification can depend on facts — for example, travel by staff specifically to train victims of human trafficking is direct to that grant, while an accountant’s payroll processing typically counts as indirect.

The panel reviewed how to compute an indirect cost rate: add the organization’s indirect-cost pool and divide by the chosen direct-cost base (many grantees use the Modified Total Direct Cost, or MTDC, method). Towson walked through MTDC rules, noting the common exclusions (equipment, participant support costs and subaward amounts above the MTDC allowance). She demonstrated a numeric example and the effect of excluding equipment or subaward amounts that exceed the MTDC cap.

Hatim Bretzua, a staff accountant in OJP’s Grants Financial Management Division, described the submission and negotiation workflow. He said grantees must send an indirect cost proposal and required documents to odforindirectcostusdoj.gov and will receive a confirmation email; OJP reviews the proposal and issues a negotiated indirect cost rate agreement for signature. Bretzua advised that proposals should generally be submitted within six months after a fiscal-year end (to allow audited financial statements to be included) and that OJP can grant extensions in some circumstances.

Bretzua listed required materials: the indirect-cost proposal worksheet showing the rate calculation; an indirect-cost-rate certification signed by a designated official; final audited financial statements (not drafts); a schedule or list of federal awards/CEFA; an organizational chart if it’s the applicant’s first submission or if the structure changed; an itemized direct and indirect cost pool reconcilable to audited statements; a list of subawards (any over $50,000); and a copy of the last negotiated rate if available.

The panel emphasized consistent treatment of costs across years and programs, compliance with generally accepted accounting principles and that negotiated rates remain subject to audit and monitoring. Towson also explained the cognizant agency rule: the federal agency that provides the most direct awards (excluding pass-throughs) typically negotiates the indirect cost rate.

During the Q&A, panelists answered detailed questions about fringe benefit rate negotiation, whether subaward amounts can be split across years (they can, but the $50,000 MTDC allowance applies across the full period of performance), and when a budget modification (GAM) is required. Panelists reiterated that indirect costs included in a budget must be shown on the budget detail worksheet in JustGrants and that any dollar increase or decrease in an approved indirect-cost budget requires a GAM.

The session closed with contact information, a webinar evaluation link and an invitation to email outstanding questions to the indirect-costs inbox. “We are always here to help you,” Towson said.