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Allowable Costs / Title 2 - Grants and Agreements

Note: Revised April 28, 2011, to replace references to OMB Circulars that have been codified in Chapter 2 of the Code of Federal Regulations (2 CFR).

The U.S. Office of Management and Budget (OMB) establishes the regulations which must be used to administer Federal grants. The USDOT's regulation in 49 CFR 18.22 refers to applicable OMB circulars to determine allowable costs. The OMB circulars have been codified in Title 2 Grants and Agreements.

For the costs of a Use the principles in
State, Local or Indian Tribal Governments 2 CFR 225
Private, nonprofit organization other than an (1) institution of higher education, (2) hospital, or (3) organization named in 2 CFR 230 as not subject to that circular. 2 CFR 230
Educational institutions. 2 CFR 220
For-profit organization other than a hospital and an organization named in 2 CFR 230 as not subject to that circular. 48 CFR Part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost principles acceptable to the Federal agency.

Audit requirements for grants and subgrants are found in 49 CFR 18.26 and 49 CFR 19.26, which refer to OMB Circular A-133: Audits of States, Local Governments, and Non-Profit Organizations.

In general, costs are allowable, as specified in the appropriate cost principles, if the costs are necessary, reasonable, and benefit this grant program. Examples of unallowable costs are those for purposes not related to this program.

2 CFR 225 has the Cost Principles for State, Local, and Indian Tribal Governments.

See also FHWA's Policy on Indirect Costs.

NOTE: The USDOT regulation at 49 CFR 18.22 refers to OMB Circulars for cost principles. These circulars have been codified in 2 CFR.

Updated: 03/14/2013
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