RSP 508–01: Charging Direct and Facilities & Administrative Costs to Sponsored Projects

To ensure compliance with federal requirements concerning consistent treatment of direct costs, and facilities & administrative (F&A) costs (Overhead or Indirect Costs)

Office of Management and Budget. OMB Circular A-21 (revised), Cost Principles for Educational Institutions, Appendix A, Part 99005, Cost Accounting Standards for Educational Institutions

Office for Research and Sponsored Projects Administration (ORSPA)

Expenditure of funds under all sponsored agreements (federal and nonfederal), including those that require exceptions to the standard treatment of direct and facilities & administrative costs

Expenditure of funds from cost sharing and program income accounts

It is the policy of the university to account for expenditures in a consistent manner. The consistent treatment of expenditures, as direct costs or as facilities & administrative (F&A) costs, ensures that sponsors do not pay twice for the same type of costs.

According to OMB Circular A-21, consistency means that costs incurred for the same purpose, in “like circumstances,” must be treated uniformly as either direct costs or as facilities & administrative costs. Certain types of costs (e.g., salaries of administrative and clerical staff, office supplies, postage, local telephone charges) are normally treated as facilities & administrative costs (indirect or overhead costs) and cannot be charged directly to sponsored projects unless “unlike circumstances” can be justified.

Facilities & administrative costs will be considered for direct charging in accordance with the guidelines of OMB Circular A-21 and only upon the submission and acceptance of the Cost Accounting Standards (CAS) exception form.

The direct charging of administrative and clerical expenses may be approved under the following circumstances:

1. the expense is an allowable cost
2. the expense is specifically identified with a major project and requires amounts of administrative and clerical support significantly greater than the routine level of such services provided by the responsible administrative unit

   and

3. the expense is necessary to complete specific requirements of the project.

The following are examples, from OMB Circular A-21, of circumstances under which such expenses may be charged directly:

1. large, complex programs such as general clinical research centers, primate centers, program projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions
2. projects that involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials, and retrospective clinical records studies)
3. projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars
4. projects whose principal focus is the preparation and production of manuals and large reports, books, and monographs (excluding routine progress and technical reports)
5. projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research fields sites that are remote from campus

   and

6. individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project-related investigator coordination and communications.

The direct charging of office supplies, postage and/or telecommunications costs, substantially beyond that normally provided by the responsible administrative unit, may be approved under the following circumstances:

1. the expense is an allowable cost
2. the expense is required by the project scope (e.g., local telephone services would be allowable under a program requiring telephone survey or postage would be allowable for a program requiring surveys by mail)
3. the cost is identified and properly justified in the sponsored agreement budget and narrative

   and

4. the sponsor has approved the expense as part of the direct cost budget.

Notwithstanding the above guidelines, if, for any reason, the sponsor or university auditors disapprove the expense, then the principal investigator is responsible for transferring those costs to a nonsponsored account.

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