State departments of transportation typically receive federal funds for the direct costs of highway projects, such as construction, materials and labor. Since 1998, states have had the option to use federal funds for overhead costs, provided they develop an ICAP. Without such a rate structure in place, indirect costs – such as those related to overseeing emergency relief contracts and reviews to ensure that LPAs comply with federal regulations – have not been eligible for federal funding.

For more information on FHWA’s “Every Day Counts” initiative, go to http://www.fhwa.dot.gov/everydaycounts/.