Nonprofit organizations other than educational and state and local governments
Nonprofit organizations (excluding educational and state/local governments) must follow OMB Uniform Guidance at 2 CFR part 200, subpart E, for indirect cost rates, unless specifically exempted.
Overview
FAR 42.705-5 addresses the determination of final indirect cost rates for nonprofit organizations that are not educational institutions or state and local governments. Instead of providing detailed procedures within the FAR, this section directs contracting professionals to follow the Office of Management and Budget (OMB) Uniform Guidance at 2 CFR part 200, subpart E, and appendix IV for establishing indirect cost rates. It also notes that certain nonprofit organizations may be exempt from these requirements, as specified in appendix VIII of the Uniform Guidance. This ensures that indirect cost rate determinations for these nonprofits are consistent with federal standards and practices, promoting uniformity and compliance across agencies and contracts.
Key Rules
- Reference to OMB Uniform Guidance
- Indirect cost rates for applicable nonprofits must be determined in accordance with 2 CFR part 200, subpart E, and appendix IV.
- Exemptions
- Some nonprofit organizations may be exempt from subpart E, as outlined in appendix VIII of the Uniform Guidance.
Responsibilities
- Contracting Officers: Must ensure that indirect cost rates for covered nonprofits are established per the referenced OMB Uniform Guidance and check for any exemptions.
- Contractors (Nonprofit Organizations): Must comply with the cost principles and procedures in 2 CFR part 200, subpart E, unless exempted.
- Agencies: Should oversee compliance and ensure proper application of the Uniform Guidance.
Practical Implications
- This section exists to align federal contracting practices with government-wide cost principles for nonprofits, reducing inconsistencies.
- Contractors must be aware of which regulations apply to their organization and maintain documentation to support indirect cost rate proposals.
- Failure to follow the correct guidance can result in disallowed costs or audit findings.