Policy on Direct and Facility and Administrative Costs

Policy Number ACA-020
Effective Date March 02, 2015
Responsible Office/Person Academic Affairs/SPA
Related Policies

ACA-021; T92-031

Additional History
Additional References

Policy Statement

The policy defines the appropriate charging of direct costs and administrative or clerical salaries and other departmental expenses consistent with the Office of Management and Budget (OMB) 2 CFR PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS.


This policy is to ensure that expenditures charged to federally sponsored grants and contracts, including federal prime subawards received by the University through another entity, are in accord with federal cost principles.

Direct Charges §200.413 “Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.”
Facility & Administrative (F&A)/ Indirect Costs §200 Appendix III “Indirect (F&A) costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.”


Per UG §200.412, “it is essential that each item of cost incurred for the same purpose be treated consistently in like circumstances either as a direct or an indirect (F&A) cost in order to avoid possible double-charging of Federal awards.”

This means, if a cost is normally treated as an F&A cost, that it should consistently be recovered through F&A and not be included in direct charges. UG 2 CFR 200 identifies costs that may be direct charged and others that are normally considered F&A. General administrative costs are normally considered as F&A costs.

Certain criteria must be met in order for expenditures to be charged to projects as either direct or through F&A cost recovery. The criteria are:

  • The costs must be allowable under UG 2 CFR 200 and the terms of the agreement. They must not be one of the costs specifically stated as unallowable in UG 2 CFR 200 or unallowed per the award document.
  • The costs must be allocable to the project. There must be a direct benefit to the project and the costs can easily be assigned to the project in proportion to the benefit received.
  • The costs must be reasonable. A prudent person would have purchased the item(s) at the stated costs for use on the specific project.
  • The costs must be treated consistently as either a direct or F&A costs. In like circumstances the costs are treated the same, as either direct or F&A costs.

Common examples of costs normally treated as Direct or as F&A include:



Salaries of personnel necessary to meet the project goals, including faculty, technicians and students

Clerical and administrative salaries

Telephone toll charges – specifically related to the project

Telephone line charges and cell phones

Telephone maintenance

Lab supplies and materials - chemicals and other scientific or technical supplies used on the project

Office supplies

Lab/research equipment and software - scientific and technical equipment and software used on the project

Office and general equipment and software – computers, office desks, word processing and spreadsheet software

Shipping expenses – directly related to the project

Postage and photocopying – for general business use

Repairs and maintenance – for lab/research equipment used on project

Repairs and maintenance – routine agreements for office and general equipment, buildings and grounds


Direct Charging of F&A Costs

While costs should be consistently treated as either direct or F&A, administrative costs may be direct charged to federal grants in unusual circumstances when the project requires an extra-ordinary amount of administrative costs and the costs can be directly attributable to the project.

§200.413 (c) “Direct charging of these costs may be appropriate only if all of the following conditions are met:

(1) Administrative or clerical services are integral to a project or activity;

(2) Individuals involved can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and

(4) The costs are not also recovered as indirect costs.”

§200.453 “Materials and supplies costs, including costs of computing devices

(a) Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable.

(b) Purchased materials and supplies must be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms should be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials and supplies costs.

(c) Materials and supplies used for the performance of a Federal award may be charged as direct costs. In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.

(d) Where federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge.”

§200.20 Computing devices (definition)

Computing devices means machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information.”

§200.461 “Publication and printing costs

(a) Publication costs for electronic and print media, including distribution, promotion, and general handling are allowable. If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the non-Federal entity.

(b) Page charges for professional journal publications are allowable where:

(1) The publications report work supported by the Federal government; and

(2) The charges are levied impartially on all items published by the journal, whether or not under a Federal award.

(3) The non-Federal entity may charge the Federal award before closeout for the costs of publication or sharing of research results if the costs are not incurred during the period of performance of the Federal award.”

Documentation & Allocation

The unusual need to direct charge the costs must be included in the original proposal and not be specifically disallowed by the sponsoring agency. The justifications should include a detailed description of the items or services and an explanation of how they will benefit the project as well as an explanation of the unusual circumstances resulting in the need for these costs to be direct charged.

For example,

  • If administrative salaries are requested, the percent effort must also be included in the budget and justification.
  • If a computer is being allocated to one or several sponsored project(s), as long as allowed by the sponsor's terms and conditions of the award, the cost of the computer would be charged to the projects based on the proportionate benefit to each project. E.g., an appropriate allocation of costs may be a computer that is purchased specifically for two projects. Ideally the allocation of costs is made at the time of purchase. The computer will be used 40% for one project and 60% for the other one. Therefore, 40% of the cost is allocated and directly charged to one project, and 60% of the cost is allocated and directly charged to the other.

SPA will review the justification to determine if the proposed costs are allowable, allocable & reasonable.

If the items are determined to be necessary after the award is received, a re-budget request must be submitted to SPA. The re-budget request should also detail the expenditures and provide a justification of the unusual need to the project. The re-budget will be reviewed by SPA to determine if the costs are allowable, then SPA will forward the re-budget to the sponsor, if sponsor approval is required for the re-budget.