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In accordance with federal government regulations, costs to sponsored projects must be allowable, allocable and reasonable. Cost Accounting Standards also impose requirements for consistency in estimating, accumulating and reporting costs and allocation of costs incurred for the same purpose. Project costs must correlate with the scope of the technical work.
Sponsor general budget and cost guidelines—plus the specific guidance contained in the program or solicitation announcement to which the investigator is responding and under which an award is issued—establish the parameters for preparing the proposal budget and establishing the approved award budget. Questions of interpretation and guidance about budget and budget justification preparation, documentation of costs (for example, for contracts and equipment awards), and post award allowability of charges and rebudgeting actions should be addressed to OSR staff. Clarification and/or approvals will be sought from the appropriate sponsor technical and/or business officials when necessary.
Section J of OMB Circular A-21 “Cost Principles for Educational Institutions” sets forth general costs principles for direct costs that can be charged to the federal government. Exhibit C of the Circular gives examples of when administrative and clerical staff salaries may be charged to a “major project.”
Facilities and Administration (F&A) costs (often referred to as indirect costs or overhead) are established by the federal government through negotiation and formal written agreement with a designated cognizant agency. In the case of the Institute, our cognizant agency is the Office of Naval Research (ONR). Through F&A recovery the Institute obtains reimbursement for actual pooled costs incurred in support of research and sponsored programs—from building maintenance and utilities through departmental administration and the library.
Implementation of F&A costs policy at the Institute is directed by the Deans Council in coordination with the Vice President and Chief Financial Officer, with OSR responsible for carrying out those directives. The general principle is to charge sponsors for full F&A costs; the primary exception is where a sponsor (often a foundation or other non-profit organization, but sometimes the State of New Jersey) has a written policy that does not allow indirect costs to be charged or only allows a modest rate of overhead recovery (usually 20% or less).
OMB Circular A-21 – Section J – General Provisions for Selected Items of Cost
OMB Circular A-21 – Exhibit C – Examples of “major project” where direct charging of administrative or clerical staff salaries may be appropriate
Deans Council Memorandum - June 22, 2006: Overhead (F&A) Rates for FY07 and Estimated Rates for FY08
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