Proposal development process actually begins long before the solicitation is released.  For USAID proposals, it’s common for potential applicants to have some idea of the different opportunities USAID will be releasing.   This is a critical stage for organizations to gather as much information as possible and begin preparing for the proposal.

Once the solicitation has been released, organizations typically have 4-8 weeks to respond.  Responding to USAID solicitations can be an enormous effort on the part of all staff involved, which is why organizations try to do as much in advance as possible.

After the proposal is submitted, USAID may come back with questions about our application, a process referred to as BAFO (or Best and Final Offer).

At the start of cost proposal development, there are fundamental criteria one should understand.  The solicitation should be thoroughly read to understand the funding instrument, budgeting requirements, project activities, relevant US government regulations, and evaluation criteria.  Understanding these criteria will establish your framework for how to move forward with preparing the cost proposal.  It will also be necessary to understand the applicable internal policies and the structure of the partnership if you are a preparing the proposal as a consortium with other organizations.

OMB circular A-122 will outline costs that are allowed and not allowed. CFR226 discusses administrative requirements of managing a grant.  The rules for cost share are established here. Standard Provisions discuss administrative requirements of managing a grant.  These provisions will be written into your award documentation. CFR228 discussed source and nationality.

Each solicitation has defines the source and nationality requirements for the project.  There are three possible codes and one should determine what this code is so it could help to prepare the budget accordingly.

The requirements apply to more than $250,000 in goods or services and a waiver can be requested after the award has been made.  The agreement officer may or may not oblige to your request for a waiver.

Certain Organization’s policies must be applied to budgets.

Breaks down the budget into major cost categories that align with the reporting format of the US government.  The major categories are salaries, benefits, travel, equipment, contractual, supplies and other direct costs.  All expenses except NICRA should fall into one of these categories and there are standardized ways of presenting them.  Be aware of the way for presenting unit costs and number of units for each of your expenses.

The equipment category is for items over $5000 and supplies is for items under $5000.  Other direct costs should capture all your costs that don’t fall into one of the other categories.

Be aware of the accuracy of the budget you prepare at the proposal stage as it will have little flexibility during project implementation.  Costs should be as accurate as possible and documentation is necessary to support how you arrived at the costs.  Changes during implementation will largely require prior approval.

A copy of the NICRA should be submitted with every proposal.  The amount budgeted for indirect costs must match the amount represented in the NICRA

It is important to understand the cost share requirements prescribed in the solicitation as early on in the proposal development process as possible.  The commitment made for cost share is auditable and is written into the agreement as a financial obligation.  Giving yourself enough time as possible to determine what cost share you will propose and document it will support a successful proposal.