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 organizations.
Are federal formula grants such as Hatch and Smith-Lever subject to the cost policy?
Yes. Federal formula grants such as Hatch, McIntire-Stennis, Multi-State, Animal Health and Smith Lever are subject to this policy. The federal formula grants are subject to Uniform Guidance which is the primary regulations from which the cost policy was derived.
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 circumstance?
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 circumstance justification?
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 regulations.
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 audit purposes.
What justification is required to direct charge a normal F&A cost as part of my sponsored agreement proposal package?
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.
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 usage of computing devices are essential to the programmatic work of the sponsored agreement and the usage is allocable, direct charging of the computing 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 sponsored agreement.
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 circumstances.
May I allocate my monthly port charges for the telephone located in my office and research lab to the active sponsored agreements during each month?
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.