Subpart E: Cost principles 2024 Uniform Guidance · effective Oct 1, 2024

2 CFR 200.462: Rearrangement and reconversion costs

2 CFR 200.462 sets 2 requirements for organizations that receive federal grants and cooperative agreements. Applies when you build your application and budget, and to every cost you charge after award.

Shows up in your application: Budget: other direct costsBudget: constructionBudget justification

What 2 CFR 200.462 requires

1. Allowable costs

What you must do

Ordinary and normal rearrangement and alteration of facilities is allowable only as an indirect cost; special arrangements and alterations are allowable as a direct cost only if incurred specifically for the federal award and with prior approval of the Federal agency or pass-through entity.

When it applies

Facility alteration, renovation, or reconfiguration costs charged direct in the budget.

Budget: other direct costsBudget: constructionBudget justification
2. Allowable costs

What you must do

Costs of restoring or rehabilitating facilities to approximately the pre-award condition, less costs related to normal wear and tear, are allowable.

When it applies

Restoration or reconversion costs at project end.

Budget: other direct costs
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Ask how 2 CFR 200.462 applies to your application

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Sections that refer to 2 CFR 200.462

Regulation text of 2 CFR 200.462

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(a) Costs incurred for ordinary and normal rearrangement and alteration of facilities are allowable as indirect costs. Special arrangements and alterations are allowable as a direct cost if the costs are incurred specifically for a Federal award and with the prior approval of the Federal agency or pass-through entity.

(b) Costs incurred in restoring or rehabilitating the recipient's or subrecipient's facilities to approximately the same condition existing immediately before the commencement of a Federal award(s), less costs related to normal wear and tear, are allowable.

Source: eCFR · checked Sep 17, 2026

Questions about 2 CFR 200.462

What does 2 CFR 200.462 require?

Ordinary and normal rearrangement and alteration of facilities is allowable only as an indirect cost; special arrangements and alterations are allowable as a direct cost only if incurred specifically for the federal award and with prior approval of the Federal agency or pass-through entity. Costs of restoring or rehabilitating facilities to approximately the pre-award condition, less costs related to normal wear and tear, are allowable.

When does 2 CFR 200.462 apply?

Facility alteration, renovation, or reconfiguration costs charged direct in the budget. Restoration or reconversion costs at project end.

Plain-English summaries for information only, not legal advice. Always check the regulation text, your award terms and your agency’s guidance.