What is a cognizant agency?

Cognizant agencies oversee indirect cost rate negotiations for federal grants, ensuring fairness and compliance in cost allocation.

A cognizant agency refers to a specific federal agency designated to oversee and coordinate the indirect cost rate negotiation process for organizations that receive federal grants and contracts. The cognizant agency plays a crucial role in ensuring consistency and fairness in the allocation of indirect costs among federal grantees and contractors.

The responsibilities of a cognizant agency include:

• Reviewing indirect cost proposals: Cognizant agencies review and assess the indirect cost proposals submitted by organizations. These proposals outline how the organization calculates and justifies its indirect costs, which are the overhead expenses not directly attributed to a specific project or activity.

• Negotiating indirect cost rates: Based on their review, the cognizant agency negotiates indirect cost rates with the organization. These negotiated rates determine the percentage of indirect costs that can be reimbursed as part of a federal grant or contract.

• Ensuring compliance: Cognizant agencies also ensure that organizations adhere to federal regulations and guidelines related to indirect cost rate determination. This includes verifying that the allocation of costs is consistent with federal requirements.

• Providing guidance: Cognizant agencies offer guidance and support to organizations during the indirect cost rate negotiation process, helping them understand and meet federal requirements.

It's important to note that the cognizant agency can vary depending on the type of organization and the federal funding they receive. Different agencies may serve as cognizant agencies for different types of entities, such as state governments, universities, or nonprofit organizations.