The Negotiated Indirect Cost Rate Agreement
A NICRA is the signed agreement that establishes what an organization may charge for indirect costs on federal awards. This is who negotiates it, what the alternative is, and how the four rate types differ.
The parts that trip people up
Who you negotiate with
One federal agency, your cognizant agency for indirect costs, reviews, negotiates, and approves your rate. Its decision applies to all your federal funders, not just that agency, and the signed result is the NICRA.
That is the point of the arrangement: one negotiation, honoured across the government, instead of a separate argument with every awarding agency.
The de minimis alternative
An organization without a negotiated rate may elect the de minimis rate: up to 15 percent of modified total direct cost, with no documentation of the cost pool required.
It is genuinely simpler, and for smaller organizations it can recover more than a negotiated rate would. But it is an election with consequences, so the comparison is worth doing rather than defaulting.
Under-recovery is the quiet failure
Under-recovery is failing to recover allowable shared costs: electing de minimis when negotiating would have recovered more, applying rates inconsistently, or leaving legitimate costs out of the pool.
Nothing flags it. The cost simply shifts onto non-federal funds and weakens the organization’s infrastructure year after year.
The four rate types
They are not interchangeable. A provisional rate is temporary, used for funding, interim reimbursement, and reporting while a final rate is established, and it is the only one of the four that is trued up afterwards.
Which type you are operating under determines whether a later adjustment produces a repayment, which is where organizations get surprised.
De minimis or negotiate?
Enter your modified total direct cost base and the rate you think you could negotiate. Indicative only.
Training on this
Priced on GSA Schedule contract 47QRAA24D004K, available as a private class for one agency on your own dates, and fundable with an SF-182.
Indirect costs and grants
All dates Eastern, refreshed daily from the Graduate School USA catalog.
Questions we get
What is a NICRA?
A Negotiated Indirect Cost Rate Agreement: the signed agreement between an organization and its cognizant federal agency establishing the indirect cost rate it may charge on federal awards. Once signed it applies across all federal funders, which is what makes it worth negotiating.
Who is my cognizant agency?
The single federal agency responsible for reviewing, negotiating, and approving your indirect cost rate. Its approval binds every federal agency that funds you, so you negotiate once rather than with each awarding agency separately.
What is the de minimis rate?
An election available to entities without a negotiated rate: charge indirect costs at up to 15 percent of modified total direct cost, with no requirement to document the cost pool. It is simpler than negotiating and for some organizations recovers more, but it is a commitment rather than a default, and the comparison is worth running.
Is the de minimis rate always the easier choice?
Easier, yes. Better, not always. Electing de minimis when a negotiated rate would have recovered more is one of the common forms of under-recovery, and under-recovery is invisible: the shortfall quietly moves onto your non-federal funds instead of showing up as an error.
What are the four rate types?
They differ in how and when they are settled. A provisional rate is temporary, used for funding, interim reimbursement, and reporting pending a final rate, and it is the only one of the four that gets trued up later. Which type you are under decides whether an adjustment turns into a repayment.
Which regulation governs this?
The Uniform Guidance at 2 CFR 200, with the cost principles in Subpart E. Our courses reflect the current version, including the 2024 revisions.
Rates are defensible when the pool, the base, and the documentation agree, which is what the courses build toward.
Training a grants or finance office?
Tell us whether your team is building a rate proposal, defending one in audit, or deciding between negotiating and the de minimis election. We will put a private class together on your dates.