POLICY TITLE: Carnegie Mellon University Policy for Directly Charging Administrative Costs to Sponsored Research
DATE OF ISSUANCE: This policy was originally issued on July 5, 1994; it was updated on January 22, 2004.
ACCOUNTABLE DEPARTMENT/UNIT: Office of the Associate Provost for Research and Academic Administration. Specific questions about policy content should be directed to Susan Burkett, associate provost for research and academic administration, x8-8746, or Rhonda Kloss, director, sponsored project accounting, x8-1015.
ABSTRACT: Contains policy for the appropriate treatment of administrative costs (salary and non-salary) incurred in support of sponsored research projects in compliance with Office of Management and Budget Circular A-21.
Appendix appears at the end of the text.
This statement sets forth policy for the appropriate treatment of administrative costs (salary and non-salary) incurred in support of sponsored research projects in compliance with Office of Management and Budget Circular A-21.
This policy applies to salary and benefit costs related to administrative and clerical staff, and certain non-salary expenses which are incurred in performance of sponsored research and recorded in Oracle awards 1-4XXXX and 1-5XXXX.
OMB Circular A-21 requires that costs related to the normal administration of sponsored programs be treated as F&A (facilities & administrative) costs, and reimbursed as part of the institution's overhead rate. However, certain specific situations can occur which will result in such costs being more appropriately charged as a direct cost of the project.
Costs which are appropriate to be charged directly to a sponsored research grant or contract must meet the definition which is detailed in OMB Circular A-21:
Direct costs are those costs that can be identified specifically with a particular sponsored project ... or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or F&A costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.
In July 1993, Section F.6.b of the Circular was revised to reflect the following wording regarding the charging of administrative costs within academic departments and research units:
In developing the departmental administration cost pool, special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or F&A costs. ... Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity.
The Appendix presents the official interpretation of Section F.6.b (developed jointly by several Federal agencies).
To directly charge administrative and secretarial salary (and benefit) costs to a sponsored program, ALL of the following guidelines must apply:
Another situation in which administrative and secretarial salary costs would be appropriately charged directly to a sponsored research award is where the project is considered to be major in scope. A research center may be established in such cases. These projects generally entail more complex reporting requirements, involve faculty and researchers from two or more disciplines, and may involve coordination with organizations other than Carnegie Mellon.
It is important that where administrative or secretarial salary costs are contemplated as direct charges to a sponsored award, such costs must be specifically itemized in the proposed budget which will be transmitted to the funding sponsor. Office of the Associate Provost for Research and Academic Administration can assist with the development of proposal budgets and can answer questions relative to a specific proposal or award.
OMB Circular A-21 requires that certain departmental expenses related to the normal administration of sponsored programs generally be treated as F&A costs, and reimbursed as part of the institution's overhead rate. Section F.6.b of OMB Circular A-21 states:
Items such as office supplies, postage, local telephone costs, and memberships shall normally be treated as F&A costs.
The university encourages charging non-salary costs directly to the activity which is being supported by the expense whenever it is possible to do so with a high degree of accuracy. For example, travel expenses incurred in performing a research project should be directly charged to the appropriate award. It is the responsibility of the principal investigator to determine if such costs have been incurred for the benefit of the specific sponsored project.
There are certain types of departmental expenses which cannot be assigned directly to a specific project with a high degree of certainty. Treatment of those types of costs are detailed below.
Office supplies should generally be treated as F&A costs. Exceptions to this guideline are:
Computer supplies specifically acquired in support of a sponsored research project can be charged to the appropriate research award.
Copying charges can be allocated directly to sponsored projects if a mechanism exists to charge all copying to the appropriate activity. For example, many copiers have the capability of charging all copy jobs via an identification code. In such a situation, it is appropriate to charge such costs to research awards.
If records are not maintained regarding copier use, copying costs should be treated as F&A costs.
Postage charges can be allocated directly to sponsored projects if a mechanism exists to charge all postage to the appropriate activity. For example, postage should be charged directly to the research awards if a specific project requires the mailing of a large number of surveys. Overnight mail deliveries (e.g., Airborne, Federal Express, messenger services) can be charged directly to the appropriate awards.
Long distance telephone calls which are specifically identified on telephone reports can be directly charged to research awardss. All other costs related to telephones (line charges, local usage units) should be treated as F&A costs (unless relating to a major project or research center).
Faxes can be allocated directly to sponsored projects if a mechanism exists to charge all fax usage to the appropriate activity. If records are not maintained regarding fax use, fax charges should be treated as F&A costs.
Membership dues to academic, technical, or professional societies are unallowable and cannot be charged to research awards.
Section F.6.b of the July 1993 revision of Circular A-21 says that the salaries of administrative and clerical staff should normally be treated as F&A costs. This section goes on to say that direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and the individuals involved can be specifically identified with the project or activity. What is the intent of this provision and under what circumstances may these costs be directly charged to sponsored agreements?
This provision is intended to establish the principle that the salaries of administrative and clerical staff should usually be treated as F&A costs, but that direct charging of these costs may be appropriate where the nature of the work performed under a particular project requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments. The costs would need to meet the general criteria for direct charging in Section D.1. - i.e., "be identified specifically with a particular sponsored project ... relatively easily with a high degree of accuracy," and the special circumstances requiring direct charging of the services would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal.
The following examples are illustrative of circumstances where direct charging of the salaries of administrative and clerical staff may be appropriate.
These examples are not exhaustive nor are they intended to imply that direct charging of administrative or clerical salaries would always be appropriate for the situations illustrated in the examples. For instance, the examples would be appropriate when the costs of such activities are incurred in unlike circumstances, i.e., the actual activities charged direct are not the same as the actual activities normally included in the institution's facilities and administrative (F&A) cost pools or, if the same, the indirect activity costs are immaterial in amount. It would be inappropriate to charge the cost of such activities directly to specific sponsored agreements if, in similar circumstances, the costs of performing the same type of activity for other sponsored agreements were included as allocable costs in the institution's F&A cost pools. Application of negotiated predetermined F&A cost rates may also be inappropriate if such activity costs charged directly were not provided for in the allocation base that was used to determine the predetermined F&A cost rates.