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U.S. Department
of Transportation
Federal Highway

Subject: ACTION: Indirect Cost Allocation Dispute
Resolution Process for State DOTs
Date: August 8, 2008
From: “Original signed by”
Margo D. Sheridan
Acting Chief Financial Officer
In Reply Refer To:

Associate Administrators
Division Administrators
Chief Counsel


Section 1212(a) of TEA-21, amended 23 U.S.C. 302 to allow State DOTs to claim reimbursement of indirect costs. Upon passage of the Act in 1998, States were provided the option to claim such costs, provided the States have an approved indirect cost allocation plan. Part 225 of title 2, Code of Federal Regulations, Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A-87) provides that if there is a dispute between the governmental unit (State DOT) and cognizant agency (FHWA) during the process of negotiating indirect cost rates, the dispute is to be resolved in accordance with the appeals procedures of the cognizant agency. The attached procedures lay out the specific steps necessary for resolving disputes that may arise while carrying out our role as the cognizant Federal agency for indirect cost allocation of State DOTs.

Please contact Dave Bruce at 802-828-4567 or by e-mail at david.bruce@dot.gov with any questions concerning these procedures.


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