[Code of Federal Regulations]
[Title 45, Volume 1, Parts 1 to 199]
[Revised as of October 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR74.27]

[Page 211-212]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
    PART 74--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND SUBAWARDS TO INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NONPROFIT ORGANIZATIONS, AND
 
                   Subpart C--Post-Award Requirements
 
Sec. 74.27  Allowable costs.

    (a) For each kind of recipient, there is a particular set of Federal 
principles that applies in determining allowable costs. Allowability of 
costs shall be determined in accordance with the cost principles 
applicable to the entity incurring the costs. Thus, allowability of 
costs incurred by State, local or federally-recognized Indian tribal 
governments is determined in accordance with the provisions of OMB 
Circular A-87, ``Cost Principles for State and Local Governments.'' The 
allowability of costs incurred by nonprofit organizations (except for 
those listed in Attachment C of Circular A-122) is determined in 
accordance with the provisions of OMB Circular A-122, ``Cost Principles 
for Nonprofit Organizations'' and paragraph (b) of this section. The 
allowability of costs incurred by institutions

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of higher education is determined in accordance with the provisions of 
OMB Circular A-21, ``Cost Principles for Educational Institutions.'' The 
allowability of costs incurred by hospitals is determined in accordance 
with the provisions of appendix E of this part, ``Principles for 
Determining Costs Applicable to Research and Development Under Grants 
and Contracts with Hospitals.'' The allowability of costs incurred by 
commercial organizations and those nonprofit organizations listed in 
Attachment C to Circular A-122 is determined in accordance with the 
provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part 
31, except that independent research and development costs are 
unallowable.
    (b) OMB Circular A-122 does not cover the treatment of bid and 
proposal costs or independent research and development costs. The 
following rules apply to these costs for nonprofit organizations subject 
to that Circular.
    (1) Bid and proposal costs. Bid and proposal costs are the immediate 
costs of preparing bids, proposals, and applications for Federal and 
non-Federal awards, contracts, and other agreements, including the 
development of scientific, cost, and other data needed to support the 
bids, proposals, and applications. Bid and proposal costs of the current 
accounting period are allowable as indirect costs. Bid and proposal 
costs of past accounting periods are unallowable in the current period. 
However, if the recipient's established practice is to treat these costs 
by some other method, they may be accepted if they are found to be 
reasonable and equitable. Bid and proposal costs do not include 
independent research and development costs covered by paragraph (b)(2) 
of this section, or pre-award costs covered by OMB Circular A-122, 
Attachment B, paragraph 33 and Sec. 74.25(d)(1).
    (2) Independent Research and Development costs. Independent research 
and development is research and development which is conducted by an 
organization, and which is not sponsored by Federal or non-Federal 
awards, contracts, or other agreements. Independent research and 
development shall be allocated its proportionate share of indirect costs 
on the same basis as the allocation of indirect costs to sponsored 
research and development. The cost of independent research and 
development, including their proportionate share of indirect costs, are 
unallowable.