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VIII-10.40(A) UMCP POLICY FOR DIRECT CHARGING OF COSTS TO FEDERAL GRANTS, CONTRACTS, AND COOPERATIVE AGREEMENTS
Approved by Vice President for Administrative Affairs,
November 27, 1996
I. Policy
The objective of this policy is to provide the institutional
standard for determining how costs are charged to federally
sponsored agreements or similar cost objectives. The policy will
apply to all major categories of cost under each major function
or activity such as instruction, organized research, other
sponsored activities and other institutional activities. The
criteria for determining when costs incurred for the same
purpose, in like circumstances are treated either as a direct
cost only or as an indirect cost only with respect to final cost
objectives are described below. Particular emphasis should be
placed on items of cost that may be treated as either direct or
indirect costs (e.g., supplies, materials, salaries and wages,
fringe benefits, etc.) depending upon the purpose of the activity
involved.
The University follows the general guidelines in sections D and E
of Circular A-21 in determining the treatment of costs as direct
or indirect. Accordingly, costs that can be identified
specifically with a particular sponsored project, instructional
activity, or other institutional activity, or can be directly
assigned to such activities relatively easily with a high
degree of accuracy, are treated as direct costs. Conversely,
costs incurred for common or joint objectives which cannot be
identified readily and specifically with a particular sponsored
project, instructional activity, or other institutional activity,
are treated as indirect costs. The University's indirect costs
are consistent with the definitions of specific indirect cost
categories in section F of Circular A-21.
The University also follows the guidelines of Section F.6.b of
Circular A-21 which specify the normal treatment of certain costs
commonly incurred by academic departments and organized research
units. Additionally, as discussed below, the University relies on
the judgment of sponsoring federal agencies, and the actions they
take on grant applications and contract proposals in determining
the treatment of certain types of costs as direct or indirect.
It is the responsibility of the department incurring the cost to
classify costs incurred for the same purpose, in like
circumstances, consistently as either direct or indirect costs.
For example, when administrative and clerical costs are directly
charged to the sponsored agreements, it is because the nature of
activity performed is different (thus creating an "unlike
circumstance") than the usual activities performed by the
administrative personnel. Within academic departments and
organized research units, major cost categories are treated as
follows:
II. Direct Cost Categories
A. Secretarial, Clerical, and Administrative Salaries and Wages
The salaries of administrative and clerical staff should normally
be treated as indirect cost. The direct charging of these costs
may be appropriate where the nature of the work performed under a
particular project requires an extensive amount of
administrative or clerical support which is significantly greater
than the routine level of such services provided by academic
departments. The costs would need to be identified specifically
with a particular sponsored project relatively easily with a high
degree of accuracy, and the special circumstances requiring
direct charging of the services would need to be justified to the
satisfaction of the awarding agency in the grant application or
contract proposal. The University believes that this can be most
effectively assessed by the principal investigator working with
the sponsoring agency's technical staff.
The following examples are illustrative of circumstances where
direct charging the salaries of administrative or clerical staff
may be appropriate.
1. Large, complex programs, such as General Clinical
Research Centers, Primate Centers, Program Projects,
environmental research centers, engineering research
centers. Groups of awards where the technical work
plans are considered to be related (Superconductivity
Research). Any center established by the Federal
Government through a center grant (Institute for
Systems Research) and other grants and contracts that
entail assembling and managing teams of investigators.
2. When an individual award has a need for at least œ day
per week (10%) of a secretarial, clerical or
administrative staff person to support the project.
3. Projects that do not pay full indirect cost (US
Departments of Agriculture and Education).
4. Projects which involve extensive data accumulation,
analysis and entry, surveying tabulation, cataloging,
searching literature, and reporting.
5. Projects that require making travel and meeting
arrangements for large numbers of participants, such as
conferences and seminars.
6. Projects whose principal focus is the preparation and
production of manuals and large reports, books and
monographs (excluding routine progress and technical
reports).
7. Projects that are geographically inaccessible to normal
departmental administrative services, such as seagoing
research vessels, radio astronomy projects, and other
research field sites that are remote from the campus.
Projects with major overseas components would fall into
this category.
These situations are considered "unlike circumstances" under
CAS 502. These examples are not exhaustive nor are they
intended to imply that direct charging of administrative or
clerical salaries would always be appropriate for the
situations illustrated in the examples. This section of the
policy deals only with salaries and wages of secretarial,
clerical and administrative and does not apply to salaries
and wages of specialist and technical staff.
B. Technical Staff Salaries and Wages
The salaries and wages of specialist and technical staff
such as programmers, technicians, editors, graphic
designers, animal maintenance staff, photographers
and others whose salaries and wages are normally treated as
direct costs.
C. Research Materials, Supplies and Equipment
The costs of research materials, supplies and equipment
(e.g. chemicals, glassware, research record keeping and
reporting materials and supplies, etc.), instructional
supplies, animals, animal care and other specialized
services, travel, consulting services, patient care, long
distance telephone toll charges identifiable to research,
instruction, or other direct cost objectives are treated as
direct costs.
D. Repair and Maintenance
Repair and maintenance involving internal building
operations and equipment which are identifiable to research
projects, instructional activities, or other direct cost
objectives, are treated as direct costs based on a work
order system or invoices from vendors, the direct charges
are credited against the Operations and Maintenance indirect
cost pool. Rent and other associated costs of facilities
used to conduct off-campus sponsored projects are also
treated as direct costs.
E. Other Costs
The costs of office supplies, postage, local telephone
(basic) costs, memberships, general copying, FAX, and
similar costs are treated as indirect costs, except under
conditions which the university considers "unlike
circumstances" under CAS 502.
The University relies primarily on principal investigators
or their designee to determine whether direct charges for
administrative or clerical salaries, office supplies,
postage, memberships, and similar costs are appropriate for
a particular project, and to fully justify these costs to
sponsoring agencies in grant applications and contract
proposals. If the sponsoring agency accepts the cost as
part of the direct project budget (i.e., does not
specifically disapprove the item in the award or other
notification to the University), then the University will
consider the cost an appropriate direct cost of the project.
On the other hand, if the sponsoring agency specifically
disapproves the cost, the University will rely on the
sponsoring agency's judgment that the cost did not meet the
criteria for direct charging and will treat the cost as an
indirect cost. If circumstances arise at a later date that
justify direct charging of the costs, the University will
seek reconsideration by the awarding agency.
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