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AC 150/5100-10A Appendix 4 level of indirect costs in the grantee depart- ment during the period to be covered by the negotiated rate, and (2) that the amount allowable under the predetermined rate would not exceed actual indirect costs. b. Negotiated lump sum for overhead. A negotiated fixed amount in lieu of indirect costs may be appropriate under circum- stances where the benefits derived from a grantee department's indirect services cannot be readily determined as in the case of small, self-contained or isolated activity. When this method is used, a determination should be made that the amount negotiated will be approximately the same as the actual indi- rect cost that may ' be incurred. Such amounts negotiated in lieu of indirect costs will be treated as an offset to total indirect expenses of the grantee department before allocation to remaining activities. The base on which such remaining expenses are allo- cated should be appropriately adjusted. 3. Limitation on indirect costs. a. Federal grants may be subject to laws that limit the amount of indirect cost that may be allowed. Agencies that sponsor grants of this type will establish procedures which will assure that the amount actually allowed for indirect costs under each such grant does not exceed the maximum allow- able under the statutory limitation or the amount otherwise allowable under this Ap- pendix, whichever is the smaller. b. When the amount allowable under a statutory limitation is less than the amount otherwise allocable as indirect costs under this Appendix, the amount not recoverable as indirect costs under a grant may not be shifted to another Federally sponsored grant program or contract. G. Cost incurred by agencies other than the grantee. 1. General. The cost of service provided by other agencies may only include allowable di- rect costs of the service plus a prorata share of allowable supporting costs (section B.12.) and supervision directly required in performing the service, but not supervision of a general Page 4 4/13/76 nature such as that provided by the head of a department and his staff assistants not directly involved in operations. However, supervision by the head of a department or agency whose sale function is providing the service furnished would be an eligible cost. Supporting costs include those furnished by other units of the supplying department or by other agencies. 2. Alternative methods of determining indi- rect cost. In Lieu of determining actual indi- rect cost related to a particular service furnished by another agency, either of the fol- lowing alternative methods may be used pro- vided only one method is used for a specific service during the fiscal year involved. a. Standard indirect, rate. An amount equal to ten percent of direct labor cost in providing the service performed by another State agency (excluding overtime, shift, or holiday premiums and fringe benefits) may be allowed in lieu of actual allowable indi- rect cost for that service. b. Predetermined faxed rate. A prede- termined fixed rate for indirect cost of the unit or activity providing service may be negotiated as set forth in section F.2.a. H. Cost incurred by grantee department for others. 1. General. The principles provided in sec- tion G will also be used in determining the cost of services provided by the grantee de- partment to another agency. J. Cost allocation plan. 1. General. A plan for allocation of costs will be required to support the distribution of any joint costs related to the grant program. All costs included in the plan will be supported by formal accounting records which will sub- stantiate the propriety of eventual charges. 2. Requirements. The allocation plan of the grantee department should cover all joint costs of the department as well as costs to be allocated under plans of other agencies or organizational units which are to be included in the costs of Federally sponsored programs. The cost allocation plans of all the agencies rendering services to the grantee department,