Direct Costs can be identified specifically with a particular sponsored project or another institutional activity and can be assigned to activities relatively easily with a high degree of accuracy. (OMB Circular A-21, Section D1)
In general, an expense may be charged to a project as a direct cost if it meets the following criteria:
- The expense is budgeted as a direct cost and accepted by the sponsor; and
- The expense conforms to A-21 definitions for institutional consistency of cost treatment in like circumstances; and
- The expense meets the A-21 definitions for allowability, reasonableness and allocability to the project.
Facilities &Administrative (F&A) Costs are those expenses incurred for common or joint objectives that cannot be readily and specifically identified with a particular sponsored project. Costs that generally fall into this category include memberships, subscriptions, general-purpose computers and office equipment, routine office supplies, local (basic) telephone charges, postage, etc., and departmental administrative support.
Direct Charging Normal Indirect Costs
In some cases, expenses normally charged as indirect, may be charged directly to the sponsored project. To meet the consistent treatment requirements, additional documentation is required to show the “unlike circumstances”, as defined in A-21. The requirements for “unlike circumstances” are as follows:
- The project has a special need for the item or service that is beyond the level of services normally provided.
- The cost can be specifically identified to the work conducted under the project and is appropriately documented.
- The cost is specified in the proposed budget of the sponsored agreement and the special circumstances requiring direct charging are justified in the grant/contract proposal.
- The sponsoring agency accepts the cost as part of the project’s direct cost budget and does not specifically disapprove the cost in the award or other notification to the University.
- For programs that do not require submission of a project budget to the sponsoring agency (such as NIH modular grants), the cost must be justified to, and be approved by The Office of Sponsored Research.
- If the cost was not included in the approved budget of the sponsored agreement, it may be charged directly to the project only where the University has rebudget authority under the terms of the sponsored agreement, and the charge meets all other allowability criteria, the circumstances are adequately documented for the file, and is approved by the OSR. The written justification must describe the benefit to the specific project, indicate that it will not benefit other non-project related activities, and explain why the cost was not proposed in the original budget when applicable. OSR will approve the request when satisfied that the sponsoring agency would have approved the costs had they been in the original budget and the justification adequately describes the particular applicability to the project(s) and is allowable, reasonable and allocable in accordance with A-21. These conditions also apply to rebudgeting under NIH modular grants.