Selected Items of Cost: Direct v. Indirect

Personnel Costs

Technical staff refers to University of Hawai‘i (UH) employees or employees hired through the Research Corporation of the University of Hawai‘i (RCUH) who perform research, instruction or other programmatic work on an extramurally funded project.
These positions include faculty, researchers, research associates, educational specialists, technicians, postdocs that are paid salaries, and graduate assistants.

Costs of administrative staff such as fiscal administrators, personnel officers, secretaries, clerks, and administrative assistants are normally recovered through the facilities & administrative (F&A) rates (i.e., indirect costs). Thus, they should not normally be charged as direct costs to federally funded projects.

Under 2 CFR 200 (Uniform Guidance), administrative staff may be charged as direct costs provided that all of the following four criteria are met:

• Administrative or clerical services are “integral” (essential, vital or fundamental) to the project or activity;
• Individuals involved can be specifically identified with the project or activity;
• Such costs are explicitly included in the budget or have prior written approval; and
• The costs are not also recovered as indirect costs.

If it is determined that all of the above criteria are met, the principal investigator (PI) should add a justification statement to the proposed budget to facilitate the required sponsor approval.

Please note that the Uniform Guidance Compliance Supplement still uses the OMB Circular A-21 Major Project examples to illustrate situations in which it may be appropriate to directly charge administrative staff to a federally funded project. The examples are as follows:

• Large, complex programs such as General Clinical Research Centers, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
• Projects which involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting (such as epidemiological studies, clinical trials,and retrospective clinical records studies).
• Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
• Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
• Projects that are geographically inaccessible to normal departmental administrative services, such as research vessels, radio astronomy projects, and other research fields sites that are remote from campus.
• Individual projects requiring project
• specific database management; individualized graphics or manuscript preparation; human or animal protocols; and multiple project
• related investigator coordination and communications.

Based on the above examples, the nature of the project remains the basis for direct charging. As a result, prior guidance still stands that “lack of departmental administrative support” is not sufficientjustification for direct charging administrative support to federally funded projects.

Extra Service Pay for Faculty

On-duty period pay

Under the Uniform Guidance, all faculty are ineligible for extra service pay, or overload, during the academic year (On Duty Period). Inter-departmental consultation performed by the faculty or other professional staff is considered routine work requiring no additional compensation by the federal government.

If the faculty or professional staff wish to be compensated, the federal government expects that a proportionate share of the individual’s institutional base salary (IBS) be charged for services performed during the On-Duty Period.

Off-duty period pay

Nine-month faculty who do not earn vacation are eligible for up to three months of summer salary that can be charged to an extramurally funded project. However, faculty should be aware that some sponsors may limit the number of months of summer salary that can be paid for with sponsor funds.

Eleven-month faculty that do not earn vacation are eligible for one month of off-duty pay that can be charged to an extramurally funded project.

Eleven-month faculty that earn vacation are not eligible for one month of off-duty pay because the federal government considers them to be twelve-month employees. To be eligible for one month of off-duty pay, the faculty member must elect to forego vacation accrual in accordance with a Memorandum of Understanding (MOU) between the faculty union and UH. The original MOU resulted from an audit finding that was resolved between the US Department of Health and Human Services and UH.

Travel Costs

Travel costs are one of the budget categories where the Uniform Guidance follows institutional policies to some extent.

While the Uniform Guidance travel section provides for dependent travel costs under certain circumstances, one of the requirements is that the institution must accept it as an institution-wide policy (i.e., applies to all source of funds). Since UH has not, dependent travel costs are not allowed on UH’s federally funded projects.

In budgeting for travel costs on an extramurally funded project, the PI should also conform to the UH allowable and unallowable travel costs guidance. Auditors will refer to this guidance for conformance before considering the federal General Services Administration (GSA) travel policies.

https://www.hawaii.edu/etravel/faq_expenseList.html

Equipment

Special purpose equipment is defined under the Uniform Guidance as “equipment which is used only for research, medical, scientific, or other technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments, and spectrometers.”

There are circumstances where non-research, non-medical or non-scientific equipment could be charged directly to extramurally funded projects. For example, UH may receive an award to outfit a learning center with furniture and computer equipment. Generally, in such cases, the sponsor has relaxed its guidelines to permit costs that are normally indirect costs to be charged as direct costs.

Office Supplies, Postage, Local Telephone Costs, and Computing Devices

Major project exceptions

Like administrative staff salaries, there are circumstances in which costs such as office supplies, postage and local telephone costs can be charged directly to extramurally funded projects. The examples are as follows:

An extramurally funded project is collecting data through a mass mail survey. If the survey packets are generated in-house, the office supplies consumed in preparing them can be directly charged to the project as well as the postage to mail the surveys.

• One of the tasks under an extramurally funded project is to set up and monitor hotlines in the place of performance. The installation costs and the monthly charges for the local telephone call center can be directly charged to the project.

Computing devices

Computing devices such as laptops, netbooks, smart phones, and tablet computers are allowable as direct charges provided that they are essential and allocable, even though not solely dedicated, to the performance of a federal award. Prior federal audit findings suggest that documentation and justification that such devices are, in fact, essential to the performance of the federal award are critical to supporting the direct charging of such costs.

Other

Computer costs

This cost type is not to be confused with computing devices. This refers to purchasing processing time and/or storage space from high-performance computing systems.

Participant support costs

Participant support costs are allowable with prior approval on conferences or training projects. Participants are non-employees that are trainees or otherwise directly benefit from the learning experience within the context of the extramurally funded project.

Publication and printing costs

The Uniform Guidance recognizes that publication costs can be incurred outside the period of performance of the award.
However, be aware that the costs must be charged to the award before closeout of the award.