3.6 Costs Requiring Prior Approval
Listing of Costs Requiring Prior Approval
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Automatic Data Processing Equipment and Software
Equipment and Other Capital Expenditures
Pre-Award Costs
Proposal Costs
Consultant Rates
Conference Costs
Interest Expense
Foreign Travel
Moving Money between Categories
Confidential Funds
Automatic Data Processing Equipment and Software
You may request to purchase Automatic Data Processing (ADP) equipment; however, the application must be written in a manner consistent with maximum, open, free, and fair competition in the procurement of hardware and services.
You should not specify brand names (see 2. C.F.R. ?? 200.319(a)(6)) when such ADP equipment includes the following types and requirements:
- Digital, analog, or hybrid computer equipment and automated fingerprint equipment.
- Auxiliary or accessorial equipment, such as data communications terminals, source data automation recording equipment (e.g., optical character recognition equipment and other data acquisition devices), and data output equipment (e.g., digital plotters, computer output microfilms) to be used in support of digital, analog, or hybrid computer equipment, whether cable-connected, wire-connected, radio-connected, or self-standing, and whether selected or acquired with a computer or separately.
- Data transmission or communications equipment that is selected and acquired solely or primarily for use with a configuration of ADP equipment that includes a computer.
- Qualification and exclusions:
- Analog computers are covered only when being used as support or assistance to a digital computer.
- Items of ADP equipment that are (a) physically incorporated in a weapon or (b) manufactured under a development contract are excluded from the above definition.
- Accessories, such as tape cleaners, tape testers, magnetic tapes, paper tapes, disk packs, or anything similar are also excluded.
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Equipment and Other Capital Expenditures
If you, as a recipient or subrecipient, have received prior approval for expenditures for equipment and other capital assets, including repairs which materially increase the useful life of equipment, then these expenditures are allowable. See 2 C.F.R. ?? 200.439.
- If you do not fully justify the expenditures for equipment in your budget and budget narrative, the grant-making component may require that the type, quantity estimated, unit, or other information be provided before the final budget can be issued.
- In reviewing equipment acquisition budgets and proposals, the following principles should be followed:
- No other equipment owned by the recipient/subrecipient is suitable for the project;
- No luxury vehicles will be approved;
- If the vehicle request is approved, the vehicle should be reasonable, and the recipients must follow the Internal Revenue Service guidelines;
- If the vehicle(s) was purchased as part of a unit of government fleet by the State or local central procurement activities, it is generally accepted as reasonable;
- Federal funds are not used to provide reimbursement for the purchase of equipment already owned by the recipient/subrecipient; and
- Equipment purchased and used commonly for two or more programs should be appropriately divided among each activity.
- An expenditure for equipment purchased for a common pool is generally allowable as a charge to the award at cost value.
- Equipment that has already been purchased and charged to other activities of the organization is not an allowable expense to the award.
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Pre-Award Costs
Pre-award costs are costs incurred prior to the project begin date and in anticipation of the award where such costs are necessary for efficient and timely performance of the scope of the work. Costs are allowed only to the extent that they would be allowed if incurred after the start date of the Federal award and only with prior approval of the DOJ awarding agency.
Prior approval is required for pre-award costs:
- Costs incurred prior to the start date of the award may be charged to the project only if the award recipient received written prior approval from the grant-making component.
- Direct recipients may approve pre-award costs for subrecipients if incurred after the start date of the Federal award.
Any and all costs in furtherance of a project which costs occur prior to an award date are at the sole risk of an applicant, and can only be reimbursed to the extent that there is prior approval.
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Proposal Costs
Proposal costs are the costs of preparing bids, proposals, or applications on potential Federal and non-Federal awards or projects including the development of data necessary to support the non-Federal entity's bids or proposals. Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as indirect (F&A) costs, and allocated currently to all activities of the non-Federal entity. Such cost, where proposed as direct costs, require written prior approval from the grant-making component. No proposal costs of a past accounting period will be allocable to the current period. See 2 C.F.R. ?? 200.460.
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Consultant Rates
Compensation for individual consultant services is to be reasonable and consistent with that paid for similar services in the marketplace.
- Each grant-making component periodically establishes a prior approval threshold consultant rate. The current rate for each grant-making component is $650 per day or $81.25 per hour.
- This limit is specified in the terms and special conditions of the award.
- When the rate exceeds the limit for an 8-hour day, or a proportionate hourly rate (excluding travel and subsistence costs), a written prior approval is required from the grant-making component. Prior approval requests require additional justification.
- An 8-hour day may include preparation, evaluation, and travel time in addition to the time required for actual performance.
- Please note, however, that this does not mean that the rate can or should be the maximum limit for all consultants.
- Rates above the established maximum threshold rate will be reviewed on a case-by-case basis. Justification for exceeding the established maximum rate may include where a rate is established through a competitive bidding process.
- In order to calculate a rate of compensation for consultants associated with and employed by institutions of higher education, divide the total compensation projected for 12 months by 260.
- If the resulting rate of compensation exceeds the maximum consultant rate established by the grant-making component, written prior approval must be obtained.
- Compensation for consultants employed by State and local government will only be allowed when the unit of government will not provide these services without cost.
- If a State or local government employee has been contracted to provide services that are related to his or her employment with the State or local government, the rate of compensation is not to exceed the daily salary rate for the employee paid by the unit of government.
- If the State or local government employee has been contracted to provide services that are unrelated to his or her employment with the State or local government, then the rate of compensation is based on the necessary and reasonable cost principles which cannot exceed the maximum rate allowed by the awarding agency without prior written approval.
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Conference Costs
All conferences (defined broadly to include meetings, retreats, seminars, symposiums, events, and group training activity) conducted by Cooperative Agreement recipients or contractors funded by DOJ must receive written prior approval. An approved award budget is not a prior approval. All prior approval requests must be submitted within the required number of days (90 or 120) in advance of the start date. See Chapter 3.10: Conference Approval, Planning, and Reporting for more information.
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Interest Expense
This expense includes all interest on debt incurred for the following:
- Acquisition of equipment and buildings
- Building construction
- Fabrication
- Reconstruction
- Remodeling (allowable with prior approval)
- This interest applies only to buildings completed on or after October 1, 1980 for State and units of local government, and on or after September 29, 1995 for nonprofit organizations. See 2 C.F.R. ?? 200.449.
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Foreign Travel
Foreign travel is defined as any travel outside of Mexico, Canada, or the United States and its Territories and possessions. However, for organizations located in foreign countries, foreign travel means travel outside of the organization???s country. Some requirements for foreign travel:
- Each separate foreign trip must be pre-approved.
- Direct charges for foreign travel costs are not allowable unless the travel has prior approval from the awarding agency.
- Indirect charges for foreign travel are allowable without prior approval from the awarding agency when they are included as part of a federally approved indirect cost rate and have a beneficial relationship to the project.
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Moving Money between Categories
Moving monies into any budget category with a zero dollar amount is not allowable without prior approval from the grant-making component. A budget modification is required. See 2 C.F.R. ?? 200.308(e).
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Confidential Funds
Confidential funds are subject to prior approval.
OJP Specific Tip
Recipients with a federally-approved indirect cost rate may not transfer funds into or out of the indirect cost category without prior approval.?? A budget modification is required as indicated in Chapter 3.5 Adjustment to Awards.?? A copy of the current approved indirect cost agreement from the Cognizant Federal Agency must be attached.
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