Q. Recovery Act Project Indirect Costs (highway)

Answer

Does the May 11, 2009 OMB memorandum: “Payments to State Grantees for Administrative Costs of Recovery Act Activities” apply to FHWA’s ARRA program? (added: 7/10/2009)

Yes,  The memo (http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-18.pdf) outliness existing flexibilities available to States so they can more rapidly recoup central services Recovery Act related costs through use of estimates, rather than historical costs.

What are “central administrative” costs, as discussed in OMB’s memorandum? (added: 7/10/2009)

The memorandum is referring to ARRA-specific General and Administrative (G&A) costs incurred centrally by State-wide government (e.g. – Governor’s Office) and either allocated or billed to benefiting State agencies, including State DOTs, depending on the nature of the cost. Typical examples of  “Billed central services” provided to agencies and/or programs include computer services, transportation services, insurance, and fringe benefits.   “Allocated central services” might include general accounting, personnel administration, purchasing, etc.

What is necessary to be able to bill such costs to ARRA projects? (added: 7/10/2009)

There are 21 State DOTs with approved Indirect Cost Allocation Plans (ICAPs).  They may use the flexibilities outlined in OMB’s memo to begin recovering such costs allocated or billed to them, once Health and Human Services has approved the SWCAP addendum plan, and once the State DOTs have modified their currently approved rates to incorporate these additional ARRA-related costs.   

What about State DOTs without an approved ICAP? (added: 7/10/2009)

For those State DOTs without currently approved ICAPs, there is a mechanism for recovering statewide central service costs which are billed or allocated to them via a SWCAP.  It’s a narrative cost allocation methodology, guidance located at 2 CFR 225 Appendix E(F)3, which must be developed and submitted to FHWA division offices for approval.  Please note: FHWA will consider use of this methodology ONLY for Statewide ARRA-related central administrative costs billed or allocated to the State DOT.

Can this narrative methodology be used to recover ARRA related G&A costs incurred by a State DOT? (added: 7/10/2009)

No.  As indirect costs which also benefit the regular Federal-aid program may not be adequately segregated from ARRA related admin costs, a full ICAP must first be developed, reviewed and approved by FHWA before any such internally incurred indirect costs may be recovered..  Without such an ICAP in place, State funds must be used.

Does the OMB memo also apply to Local Public Agencies (LPAs)? (added: 7/10/2009)

Answer IC-6: Yes, many LPAs have ICAPs approved by their State DOTs or other cognizant oversight entity for indirect cost allocation plans.  Once approved by their State DOT, in accordance with 2 CFR 225 E(D)1(b), LPAs may also begin recouping ARRA related G&A costs more rapidly through use of estimates than using the generally employed historical cost method.

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  • Last Updated Dec 13, 2016
  • Views 2
  • Answered By David Martin

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