Does the cost policy
apply to all sponsored agreements?
The cost policy applies to all sponsored
agreements, federal and non-federal. However, the costs identified
as “normally F&A” may be directly charged to a non-federal
project if approved (does not specifically disapprove) by the
sponsor. For this purpose a federal sponsored agreement includes
federal awards received directly by the University as well as
subawards received by the University under federal awards to other
Are federal formula
grants such as Hatch and Smith-Lever subject to the cost policy?
May I charge a normal
F&A cost directly to a federal sponsored agreement whose
F&A rate is less than the federal negotiated F&A rate?
In general, no. By accepting a federal
sponsored agreement, the University is waiving its right to
recovery the difference between the negotiated F&A rate and
the sponsored agreement F&A rate. If a cost is incurred in
unlike circumstances, the federal government may approve the
direct charging of normal F&A costs.
What is an unlike
Generally, an unlike circumstance is
defined as an activity/use of an item or service which is
substantially greater in amount or different in purpose than the
normal use of that item. To direct charge a normal indirect cost
on a federal sponsored agreement, specific requirements must be met.
How do I assess
whether a cost is substantially greater in amount or different
in purpose than the normal use of that cost type?
A series of the key justification questions
are available to assess whether a normal F&A cost was incurred in unlike
circumstances. If you are unsure whether your justification meets
the threshold of an unlike circumstance, reference the unlike circumstance examples for more
insight on what might constitute an unlike circumstance
Why can department
administrative type costs be direct charged on experiment
station and extension sponsored agreements without an unlike
Experiment station and extension F&A rates
do not include a department administrative cost component so
departmental costs may be direct charged. However, administrative
costs which are direct charged to experiment station and extension
sponsored agreements must still meet the reasonableness,
allocability and allowability federal cost principles and other
sponsor specific regulations.
May I direct charge
administrative and facility costs on federal formula grants
without justification of it being an unlike circumstance?
Yes. Since federal regulations on federal
formula grants do not allow the application of F&A rates,
direct charging of administrative and facility costs may be
allowable if they meet the reasonableness, allocability and
allowability cost principles and other sponsor specific
How do I allocate a
cost which benefits two or more sponsored agreements?
Costs should be proportionally allocated to
each sponsored agreement without undue effort or cost
(proportional benefit rule). Click here for a list of reasonable
allocation methods. Written documentation which describes the
allocation method and its reasonableness should be retained for
What justification is
required to direct charge a normal F&A cost as part of my
sponsored agreement proposal package?
The SPA routing form has been modified to
enable you to provide the necessary justification regarding a
direct charge of a normal F&A cost. The justification must be
sufficient for an independent review to assess its merit. In
addition, the proposal's budget narrative must specifically
describe the unlike circumstance and relevance of the cost to the
work being conducted under the sponsored agreement.
Is it appropriate to
direct charge administrative or clerical salaries to NIH modular
grants e.g. R01 grant?
Due to the modular grant budget year limit
of 250K, administrative or clerical costs do not typically rise
above the normal F&A costs required to administratively
support the scope of work funded by a budget of this magnitude.
Is there a minimum
amount of effort required before an administrative or clerical
person rises to a level beyond normal F&A costs?
No. However, the person would typically be
working on a major project and the effort would be allocable
without any undo effort or cost. Minimal effort of 5% or less
would typically not rise to a level beyond normal F&A costs.
Will the award set up
process establish the appropriate budget categories (F levels)
to allow direct charging of costs which are typically F&A
SPA will record the appropriate budget
categories on the SPA budget worksheet during the proposal
submission process. Upon award, SPA will set up the award using
only the approved budget categories on the SPA worksheet. Please
note that the non-salary budget categories have been redefined to
more effectively.control the charging of normal F&A costs.
May I justify a
normal F&A costs as a direct cost after the sponsored
agreement has been awarded?
Yes. Prior to processing the charge on the
sponsored agreement, submit a direct charge justification form to
SPA for consideration and obtain their approval. SPA may need to
establish a new budget category for a non-salary cost as part of
this approval process.
When may it
appropriate to direct charge a laptop to a sponsored agreement?
When the primary usage of electronic
devices including laptops will be used 95% or greater on the
programmatic work of the sponsored agreement, direct charging of
the electronic device may be appropriate on the sponsored
agreement. If a device is funded 100% from a federal sponsor,
incidental use of the electronic device for non-project purposes
is allowed and may never interfere with the project use or require
the device to be removed from where the project work is being
conducted. The electronic device may not be used to conduct
administrative tasks such as ordering supplies or grants
management as these tasks are typically not directly charged to a
Are office supplies
allowed as a direct cost on a sponsored agreement?
Typically, no. However, sponsored
agreements which require excessive mailings, brochures, manuals or
materials for conferences may have office supply requirements in
excess of the normal F&A costs and incur costs in unlike
May I allocate my
monthly port charges for the telephone located in my office and
research lab to the active sponsored agreements during each
Typically, no. Local telephone costs are
considered a F&A cost. Dedicated telephone lines to conduct
surveys, manage a multi-site project, provide a hot line or
provide patient confidentiality may be appropriate unlike
circumstances to direct charge local telephone expenses.