Sponsored Projects Accounting (SPA), in conjunction with Office of Sponsored Research Services (OSRS), has developed an updated set of policies and procedures for managing administrative costs on federally funded sponsored projects. The information noted below was provided from the following sources: 2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance or UG); the NIH Grants Policy Statement; the NSF Grants Policy Manual; and the current Financial Information System (FIS) chart of accounts. All University personnel involved with the financial management of sponsored projects should utilize these policies and procedures. This document supersedes all previous policies on this subject.
Uniform Guidance prohibits most administrative costs from being directly charged to federally funded sponsored projects. Normally, the salaries of administrative and clerical staff plus non‐personnel costs such as office supplies, postage, local telephone and memberships must be treated as facilities and administrative (F&A) costs. Accordingly, administrative costs should not be directly charged to federally funded grants and contracts. These administrative costs should be charged to departmental accounts and/or other non‐federal funding sources. Uniform Guidance further stipulates that administrative costs can be direct charged to a project when exceptional circumstances exist. Noted below is a description of those exceptions for non-personnel costs. Please visit the University’s policy on Administrative and Clerical Salaries for personnel costs.
Items such as office supplies, postage, local telephone costs and memberships cannot be direct charged to grants unless their applicability and distinctive requirements (i.e., unlike circumstances) can be clearly established. The cost must support activity that is directly related to the project and the link between the cost and the activity is close and clear.
- Office Supplies and Research Office Supplies Certain items may meet the exceptional criteria such as specialized laboratory notebooks used specifically to document the results and conclusions of scientific activity for a particular grant. Investigators cannot use such laboratory notebooks for purposes other than documentation of experiments (e.g., class notes, general “to do” lists, etc.) for a particular grant or specified group of grants. Normal office supplies items (i.e., pens, pencils, paperclips, paper, files/folders…) would not be appropriate as a direct cost.
- Postage Extraordinary postage, FedEx or courier fees directly related to the scientific/technical needs of the project may be appropriate. The costs of shipping project samples to a laboratory or a collaborator for analysis may be appropriate, as would costs for mailing large surveys. Costs for routine correspondence or mailing proposals, manuscripts or reports would not be appropriate.
- Local Telephone, Fax and Data Line Costs Local telephone, fax and data line costs would not be appropriate where the purpose is to provide general telephone/fax/data line accessibility to faculty and staff.
- Cell Phones and Pagers The costs of these items may be appropriate for an individual whose primary task is to travel from location to location to gather data or conduct patient surveys and that individual must maintain contact on a continual basis, as part of the specific needs of the project. Costs would only be allowable based on the pager/cellular telephone use being dedicated solely to the needs of the project. In the case of an individual who has multiple duties or works on several projects or where the pager / cell phone is not an integral part of the specific tasks associated with the project, costs of a pager/cellular phone would not be appropriate as a direct expense. If the pager/cellular phone is needed primarily because the person needs to be reachable by staff, such costs may not be directly charged to a grant.
- Memberships, Professional Dues Appropriate as a direct cost on an exception basis only where: (1) Membership is a mandatory requirement of the sponsored agreement; or (2) for training/fellowship programs where the membership is authorized for a trainee as part of the trainee’s development/training program.
The University’s general ledger system contains specific budget object codes related to functional expenditure categories. The budget object codes related to the administrative costs noted above can be restricted for federal and other applicable sponsored projects, thus ensuring that transactions cannot post to applicable accounts. Additionally, Uniform Guidance also stipulates that certain costs are unallowable under most circumstances, regardless of its treatment as a direct or indirect cost. Please refer to the University’s Unallowable Cost Policy for details.
Federally Funded Project (Direct and pass‐through)
The Principal Investigator (PI) should normally exclude administrative and clerical costs from proposals submitted to federal agencies. However, if the above exception criteria have been met, these administrative costs should clearly be noted and justified in the proposal budget and budget justification. Proposal submissions which include budget requests for direct charging of administrative and clerical expenses are subject to review by OSRS prior to the submission of the application. Subsequent to the receipt of an award notice that contains federal funding (including federal pass‐through awards), OSRS will restrict the following budget object codes on the account and related allocations when the fund is established:
- 3403 – Research Office Supplies
- 3455 – Laser Printer Supplies
- 3512 – Postage
- 3530 – Telephone Monthly Service
- 3532 – Telephone Data Processing Equipment
- 3557 – Memberships
Please refer to Attachment A for detailed descriptions of these budget object codes.
If the PI believes that certain administrative expenditures are appropriate on a federal project, an Administrative Cost Exception (ACE) form should be completed and submitted to SPA. The PI should clearly justify the basis of the unique and mitigating scientific/technical needs of the project. SPA will review the justification in the ACE form and make the final determination of whether the costs are considered direct or F&A.
Only administrative and clerical costs specifically noted on the ACE from should be charged to the fund. If the scientific need/requirement to incur other/additional administrative costs arises during the performance of the project, and those costs differ substantially from the costs on the approved original ACE form, a secondary ACE form should be completed and submitted to SPA for approval. In addition, the ACE approval is specific to the department fund number combination and must be completed for each subsequent allocation or new fund number. Please contact SPA regarding with questions or clarifications about the ACE Form process.
The PI should continue to review the administrative costs charged to the project on an on‐going basis to ensure appropriateness and consistency. The PI or his/her designee should also utilize trailing documents in FIS or notations on the source documents to verify the specific identification and unlike circumstances.
While there is no specific dollar value required for exception requests, exceptions should only be requested for extraordinary costs and circumstances, so that most small dollar value requests would probably not meet the strong, mitigating need criteria for an exception. Additionally, neither the lack of other non‐sponsored supportive funding nor the availability of funding under a sponsored agreement is justification, in and of itself, for requesting an exception. All exceptions must be based on a specific, extraordinary scientific/technical need and must be essential to successful completion of the project.
Private / Non‐Federal Projects
Restrictions on administrative costs vary substantially among non‐federal sponsors such as voluntary health agencies, private foundations and/or industry. A number of non‐federal entities will specifically address administrative costs within the terms and conditions of the award, whereas some do not provide that level of detail. If the PI believes that there is a project related need for certain administrative costs, he/she should contact SPA to discuss their reasonableness and allocability to the project. In some situations, it may be necessary to contact the awarding agency to obtain clarification and/or approval for administrative costs.
For non‐personnel administrative costs, OSRS will prohibit the applicable budget object codes that have been explicitly deemed unallowable/inappropriate by the sponsoring agency. For administrative salaries and wages, an Administrative Cost Exception (ACE) form should be completed and submitted to SPA. The PI should describe the direct benefit and scientific/technical needs of the administrative personnel to the project.