Proposals: Allowability and Allocability
Federal
cost principles outlined in OMB
Circular A-21 establish the following requirements:
- Costs
must be reasonable and necessary for the performance
of the sponsored program.
- Costs
that benefit more than one sponsored program should
be allocated to the “users” in proportion
to the benefits received, using a reasonable basis for
reflecting use or level of service.
- Costs
may not be shifted to other sponsored programs due to
cost overruns, avoidance of restrictions imposed by
law, or for convenience.
- Section J of OMB
Circular A-21 provides a list of allowable and unallowable
costs, and the principles to be applied in establishing
the allowability of certain items. These principles
are applicable irrespective of whether a particular
item of cost is to be treated as a direct cost or an
F&A cost. Failure to mention a particular item of cost
is not intended to imply that it is either allowable
or unallowable; rather, determination as to allowability
in each case should be based on the treatment provided
for similar or related items of cost. In case of a discrepancy
between the provisions of a specific sponsored agreement
and the provisions in Section J, the agreement should
govern.
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| Direct
Costs Versus Facility and Administrative (F&A)
Costs: |
- Direct
Costs
Those
costs that can be easily and accurately identified specifically
with a particular sponsored project.
Examples:
- salaries/fringe
benefits for principal investigator, co-investigators,
technical staff, and collaborators (relative to the
level of effort expended on the project);
- laboratory
supplies;
- long-distance
telephone toll charges;
- animals
and animal care costs;
- equipment
costs;
- travel
costs;
- specialized
shop costs.
- Facility
and Administrative Costs:
Those
costs that are incurred for common or joint objectives
and therefore cannot be identified readily and specifically
with a particular sponsored project.
Examples:
- salaries/fringe
benefits for administrative and/or secretarial staff;
- routine
departmental administrative and accounting costs;
- membership
dues/fees for technical and/or professional organizations;
- office
supplies;
- ordinary
and routine postage;
- costs
associated with preparing proposals, including typing,
copying and mailing costs;
- telephone
hook-up fees and local service charges;
- computer
hook-up fees.
- Consistent
Treatment:
- Costs
incurred for the same purpose in like circumstances
must be treated consistently as either direct
or F&A costs.
UCD
Fiscal Policy 4-7 provides more information and guidance on the treatment
of costs as either direct or F&A costs.
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