Frequently Asked Questions - Cost Principles for Sponsored Projects

Yes. A-21 says that the administrative effort related to managing human protocols is "major". Therefore the administrative costs related to managing this project's human subjects would be allowable. Make sure the costs are properly budgeted and justified in the proposal or rebudgeting documentation and are specifically identified to the project!

Yes. A-21 says that large, complex programs that entail assembling and managing teams of investigators qualify the award as "major". In this example, the existence of the subaward alone does not qualify the award as major, but complexity of the subaward does. Therefore the administrative costs related to managing this project's subcontract would be allowable. Make sure the costs are properly budgeted and justified in the proposal or rebudgeting documentation and are specifically identified to the project.

Yes. A-21 says that programs that require extensive data accumulation, analysis and data entry are "major". Therefore the administrative costs related to managing this project's data collection and entry, plus the administrative effort related to maintaining the database would be allowable. Make sure the costs are properly budgeted and justified in the proposal or rebudgeting documentation and are specifically identified to the project.

Yes. A-21 states that projects whose principle focus is the preparation and production of manuals, large reports, and books are "major". Therefore the administrative costs related to researching, preparing, editing and typing the manuscript would be allowable. Make sure the costs are properly budgeted and justified in the proposal or rebudgeting documentation and are specifically identified to the project.

Yes. Projects that are remote from normal departmental administrative services are considered to have administrative needs that are "major". Therefore the administrative costs related to managing this project would be allowable. In general, projects that must duplicate an administrative infrastructure because access to normal campus infrastructure is geographically prohibitive can charge the cost of the duplicative administration to the awards. Projects, however, must be remote from campus, making access to campus administrative services impractical. Also, be sure the costs are properly budgeted and justified in the proposal or rebudgeting documentation and are specifically identified to the project.

Using location alone, probably not. For projects to qualify as "major" under this provision of A-21, they must be performed in areas remote from campus and their access to campus infrastructure impractical. However, even in downtown Oakland, it would be reasonable to assume that the project would need to duplicate some of the "normal" administrative services like photocopying. In this case, and with proper justification and documentation, photocopying costs, for example, could be allowed.

Maybe. Remember, A-21 definitions for "major" are guidelines to help PIs decide if administrative and clerical salaries and wages are allowable costs, not to give overall definition or character to a project. In this example, is the amount of administrative and clerical effort related to data collection, manuscript preparation and the coordination of the collaborators more than a routine level? If so, then the administrative effort is probably "major" and any administrative costs necessary to perform these tasks would be an allowable direct cost to the project. If not, then probably not.

Maybe. Size of an award alone does not make the administrative effort related to a project "major" according to A-21. What matters is the type of work proposed and the amount of administrative effort necessary to complete the technical scope. If the amount of administrative effort necessary is more than the routine level of support already provided by campus or the department or ORU, then the award could be major.

The costs are allowable as they are required for the technical scope of the projects, but rotating costs between awards does not meet A-21's redistribution standards. Instead, the group must distribute the costs to benefiting functions using some reasonable allocation basis like FTE, head count, square footage etc. The keys to a successful redistribution plan are:

A. all benefiting functions must share in the costs,

B. a reasonable basis for the redistribution is established, and

C. the redistribution basis is documented

No, you would not have to allocate a share of the original equipment purchase to the Sloan award. OMB Circular A-21 states (C4) "where the purchase of equipment or other capital items is specifically authorized under a sponsored agreement, the amounts thus authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment" However, at the time of purchase if it is known that multiple projects would benefit from the purchase and the cost is allowable, the order should be funded by all benefiting sources in an appropriate proportion.

Charging sponsored awards directly for off-campus facility rent can be allowed. The keys to charging sponsored awards for off-campus rental costs are:

A. the costs must be allowable to the fund sources charged,

B. if some of the fund sources charged are sponsored awards, they must carry the off-campus overhead rate,

C. the rental costs must be equitably shared across all functions that occupy the space, including the administrative function, and a reasonable metric to determine the distribution must be documented.

So, for example, it would not be allowable to charge the entire rent to only three of the projects, and it would not be allowable to allocate rent costs only to the sponsored activity. It would also not be allowable to omit the administrative function from sharing in the rent costs. Be sure to use one of the two A-21 distribution methods and to maintain appropriate supporting documentation for the redistribution.

No. The costs in question are administrative in nature and would be subject to the allowability criteria for administrative costs established in A-21 and campus policy. While it is true that the PI does have rebudgeting authority and A-21 does allow for costs related to IRB preparation to be directly charged to sponsored awards under the "major project" definitions, the fact that the agency has specifically disallowed the cost makes it unallowable. Additionally, to have the project classified as "major" the effort related to the IRB would have to be administratively intensive. This example does not provide adequate justification for an administratively intensive exception.

Yes, assuming the PI has rebudgeting authority. The costs are administrative in nature and will need to meet the requirements of A-21 and campus policy to be allowable. Although the tasks involved in managing these aspects of the award are the same that the department business office would normally handle, the level of administration is not routine and could be directly charged to the award under A-21's "major project" definitions. The costs would, however, need to meet the other standards as well: they would need to be specifically identified to and benefit the project, included and justified in the rebudgeting documentation (provided the award allows for rebudgeting) and not specifically disapproved by the sponsor.

For federal awards: Maybe. These administrative costs would need to meet the tests of allowability and then be properly documented to be charged directly to the award. The time spent coordinating the conference could be charged to the award, citing A-21 examples of a "major project" for conference coordination (provided the cost is identifiable to the award, budgeted and approved by the agency) but the effort devoted to research administration must meet the tests of allowability. In this example, the assistant's effort related to research administration has not been justified along A-21 guidelines. Therefore the salary would therefore need to be split: 50% charged to the sponsored award for conference coordination and 15% to other appropriate sources.

For non-federal awards: Sponsor policy would apply. If the sponsor allows for administrative costs and they have been budgeted, justified and approved by the sponsor they could be charged to the award. If the administrative costs have not been budgeted, justified and approved, the cost could be placed against the non-federal source provided the sponsor has not specifically disapproved the cost and the PI has followed the sponsor's rebudgeting terms.

Yes, but..

For federal awards: The administrative assistant's time, as an administrative cost, would need to comply with OMB A-21 guidelines to be directly charged to a federally sponsored award. Additionally, administrative effort related to travel arrangements would need to be beyond the level of services provided by the department. If we assume the costs have been budgeted and justified in the proposal and not specifically disapproved by the sponsor then the effort related to making travel arrangements could be allowed. However, the amount of time your assistant actually spends on making travel arrangements may not be worth the administrative effort related to documenting and tracking the expense.

For non-federal awards: Sponsor policy would apply. If the sponsor allows for administrative costs and they have been budgeted, justified and approved by the sponsor (or if the costs were not originally proposed but the PI has followed the sponsor's rebudgeting terms) they could be charged to the award.

No. Clearly, the administrative effort in support of the human subjects is an allowable administrative expense. It meets the A-21 major project requirement, and assuming it was proposed, justified, and approved by the sponsor or has been properly rebudgeted for, it can be directly charged to the sponsoring NIH award. However, only the level of effort related to the human subjects' management could be charged directly to the NIH award (50% time). The balance of the AA's effort, which is related to either routine administrative tasks or to teaching, would not meet the tests of allowability under A-21 and campus policy. This level of effort (50% time) would need to be charged to other eligible fund sources.

There is no way to guarantee any cost from disallowance! But you can take a series of steps to help build a solid case of allowability: identify and carefully justify costs in the original proposal, charge costs in strict accordance with the approved budget or within rebudgeting authority, and document charges made to sponsored awards with accepted means of documentation. These elements together build a solid case for allowability. The lack of other eligible fund sources is never justification for directly charging administrative costs to sponsored awards.

In this example, while the administrative position in question has been approved by the agency at 100% effort, the actual amount of effort spent is significantly less. Only the amount of effort spent in allowable activities related to this award can be directly charged to the award regardless of the amount approved by the sponsor. The effort spent in non-research related roles will need to be transferred to other eligible fund sources.

The costs are definitely administrative but under A-21 and campus policy would need to meet the tests of allowability to be directly charged to sponsored awards. Making a case for federal allowability based upon the group's total funding profile or size as a "major project" would not meet the standards of A-21. However, on an award by award basis, if the administrative effort could be justified as above the routine level of support provided by the department and necessary to the completion of the project, it could be allowed. Using a reasonable metric such as project FTE to redistribute the costs would be acceptable. For non-federal awards, as long as the costs are budgeted and justified and within the sponsor's policy, they could be allowed.

For federal awards: Clerical staff effort spent preparing new proposals, including competing renewals, can never be charged to federal awards. In fact, technical personnel cannot charge their time spent preparing new proposals to active federal awards. The preparation of required interim reports, like non-competing progress reports and budget reports because they are required for the project, however, could be charged with proper justification and documentation.

For non-federal awards: Sponsor policy would apply. If the sponsor allows for administrative costs and they have been budgeted, justified and approved by the sponsor (or if the costs were not originally proposed but the PI has followed the sponsor's rebudgeting terms) they could be charged to the award.

Maybe. For federal awards: The administrative assistant's time, as an administrative cost, would need to comply with OMB A-21 guidelines to be directly charged to a federally sponsored award. Additionally, administrative effort related to these activities would need to be beyond the routine level of services provided by your department or ORU. If the costs have been budgeted and justified in the proposal and not specifically disapproved by the sponsor, the effort related to these activities could be allowed. However, the amount of time your assistant actually spends on performing these tasks may not be worth the administrative effort related to documenting and tracking the expense.

For non-federal awards: Sponsor policy would apply. If the sponsor allows for administrative costs and they have been budgeted, justified and approved by the sponsor (or if the costs were not originally proposed but the PI has followed the sponsor's rebudgeting terms) they could be charged to the award.

Computers (inventorial and non-inventorial) used to accomplish the technical scope maybe charged directly to sponsored awards provided they can be specifically identified to and benefit the project, are included and justified in the budget and are not specifically disapproved by the sponsor. Computers used for administrative work would need to meet the tests of allowability to be directly charged to a sponsored award. In this example, the computers used for general communication could be directly charged as they are required for the technical conduct of the sponsored agreement, provided they have been proposed and justified and not specifically disapproved by the sponsor, but would need to be justified along A-21 guidelines for major projects if an administrative cost. In either case, the cost should be distributed to all benefiting activities using a reasonable basis described by A-21 or in campus policy.

The federal government is particularly sensitive to computer purchases on federal awards. This is an area they routinely review. Care must be exercised to assure that computer purchases are properly justified and documented when charged to federal awards.

For non-federal sponsors: Sponsor policy would apply. If the sponsor allows for computer costs and they have been budgeted, justified and approved by the sponsor they could be charged to the award. If the computer costs have not been budgeted, justified and approved, they could be placed against the non-federal source provided the sponsor has not specifically disapproved the cost and the PI has followed the sponsor's rebudgeting terms.

Computers (inventorial and non-inventorial) used to accomplish the technical scope maybe charged directly to sponsored awards provided they can be specifically identified to and benefit the project, are included and justified in the budget and are not specifically disapproved by the sponsor. Computers used for administrative work would need to meet the tests of allowability to be directly charged to a sponsored award. In this example, the computers used for the graduate student efforts and the computer used to perform experiments and collect data could be directly charged as they are required for the technical conduct of the sponsored agreement, provided they have been proposed and justified and not specifically disapproved by the sponsor. The computer for the AA, however, could be charged to the sponsored award using the interrelationship rule and the AA's FTE to apportion the cost between the NSF award and the other sources of salary funding for the AA assuming that the AA's salary meets A-21 and campus policy for allowability and is charged appropriately.

The federal government is particularly sensitive to computer purchases on federal awards. This is an area they routinely review. Care must be exercised to assure that computer purchases are properly justified and documented when charged to federal awards.

For federal awards: No. The application of an off-campus F&A rate alone is not adequate justification. The AA's salary would still need to meet the tests of allowability under A-21 and campus policy to be directly charged to federal awards.

For non-federal awards: If the expense has been budgeted, justified and approved by the sponsor, yes, it can be directly charged to the award. If the expense has not been budgeted, justified and approved by the sponsor, the expense could be charged if the PI has rebudgeting authority and has rebudgeted and justified the expense, and the expense has not been specifically disallowed by the sponsor (either through the proposal process or through sponsor policy).

A reduced or capped indirect cost rate does not change the allowability of costs that are normally indirect. The AA's salary could be charged to the training award if the cost was specifically budgeted and justified, not disallowed by the funding agency and must be for administrative effort that is greater than the routine level of services normally provided by department administrative staff.

No. In order to directly charge administrative expenses to federal sponsors, the administrative expenses must meet the criteria set forth in A-21 and campus policy regardless of the sponsor's approval.

Payments to vendors, payroll and benefit costs through campus hires, subawards, journal entries from other campus entities such as recharges, reimbursements for expenses or travel claims are all examples of direct charges to sponsored awards. It is expected that each of these charges would be supported by documentation that indicates the PI's consent for the charge and documents the appropriateness of the costs. Vendor payments, for example, should be supported by a request (dated and signed) from the PI or designate which indicates the specific items to purchase and the sponsored award to charge, a packing slip as proof of receipt and an invoice detailing items and their cost. Payroll expenses are supported by payroll detail and effort reports signed and dated by the employee or PI indicating the awards charged. For any redistribution methodology, the verified log sheets or the allocation methodology with PI's signature approval would need to be kept as documentation.

OMB Circular A-21 (C4d(4)) says "if the institution authorizes the principal investigator or other individual to have primary responsibility ... for the management of sponsored agreement funds, then the institution's documentation requirements for the actions of those individuals (e.g., signature or initials of the principal investigator or designee or use of a password) will normally be considered sufficient". Thus, a designee can be identified but this must be done within the policies already in existence for each specified item of cost. This means that in some cases authority cannot be delegated because it is prohibited by other campus policies.

The expense would have to meet the tests of allowability and not be specifically disallowed. There does not seem ample justification to qualify the expense as technical (it is not necessary to carry out the technical scope of the sponsored work). It also does not seem to qualify as an allowable administrative expense under the exceptions allowed by A-21 and campus policy. The expense appears to be an entertainment expense for social purposes and would be specifically disallowed as a direct cost by A-21 and campus policy. Other expenses that are expressly disallowed as direct charges to federal awards by A-21 and campus policy are:

• Alcoholic beverages
• Alumni activities
• Automobiles for personal use
• Attorney's fees for defense against federal government claims
• Bad debts
• Entertainment costs of a purely social nature
• Fines and penalties
• Goods and services for personal use
• Lobbying costs
• Proposal preparation costs
• Parking permits for personal use, such as travel to and from work