Charging for Administrative and Technical Expenses
The Uniform Guidance is effective for federally sponsored agreements and new funding increments awarded on or after December 26, 2014. Federal awards received before December 26, 2014 incorporating A-21 must continue to follow the requirements in OMB A-21 and Stanford’s policy on Charging for Administrative and Technical Expenses (RPH 15.4).
Administrative costs should typically be treated as indirect costs on federally sponsored projects; however, when certain criteria are met, they may be allowed as a direct cost.
Technical expenses should be charged directly to sponsored projects if the expense can be specifically identified and provides technical benefit as described in the project's scope of work.
About Administrative Charging
Federal Guidance on Direct Charging Administrative Salaries
Stanford Policy, OMB Circular A-21 and the Uniform Guidance establishes the principle that administrative salaries (salaries of clerical and administrative personnel) should normally be treated as indirect costs F&A (Facilities & Administrative).
For awards incorporating OMB Circular A-21 it further establishes that universities may charge directly those administrative costs that are above what would normally be provided:
Where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity.
Technical expenses shall be treated as direct costs wherever identifiable to a particular sponsored agreement. (These include salaries of Principal Investigators and technical staff, laboratory and other technical expenses)
Federal awards received before December 26, 2014, incorporating OMB A-21 must continue to follow those requirements and Stanford’s policy on Charging for Administrative and Technical Expenses.
Effective September 5, 2014, Stanford Policy requires proposals to federal sponsors include the Uniform Guidance regulations on administrative salaries.
Stanford policy states direct charging administrative salary costs to federally sponsored projects is appropriate only if ALL four of the following conditions are met:
1. Administrative or clerical services are integral to a project or activity
- The requirement that the cost is “integral” means the services are essential, vital, or fundamental to the 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
- A budget justification must be included in the proposal (see RPH 14.1, Preparation, Review, and Submission of Sponsored Project Proposals)
4. The costs are not also recovered as indirect costs
NIH modular grants or similar grant instruments do not require line-item budgets. (Note: Rebudgeting authority may be used to charge administrative expenses not included in the approved budget if specific rebudgeting authority for clerical and administrative expenses is allowed by award and sponsor rebudgeting guidelines. See, for example, NIH administrative requirements.)
All deans' office administrative activities must be consistently treated as F&A costs. Therefore, no deans' office administrative expenses shall be charged directly to sponsored awards . Deans' sponsored project activities are subject to RPH 15.4.3
Any other administrative costs that are required to perform the technical scope of work may be directly charged as long they provide technical benefit to the sponsored project.
Direct charging administrative or clerical salaries to a non-federally sponsored project is appropriate if the services benefit the project. Some non-federal sponsors may have specific requirements for direct charging administrative costs. Such requirements need to be addressed in proposals. Check the terms and conditions of the award to determine if non-federal sponsors have adopted A-21, or the Uniform Guidance.
Proposing Administrative Expenses
For federal sponsors, the PDRF (Proposal Development and Routing Form) includes the following question.
Is this Integral as defined by the Uniform Guidance, allowing administrative and clerical salary expenses to be charged (Federally-Funded Projects only)?
If you answer “yes” to that question, you must justify how the salaries are “integral to project” in the budget justification section of the proposal.
The question will not appear in the PDRF for non federal sponsors.
Effective Budget Justifications
Write a budget justification for each administrator or clerical staff member included in the proposal budget. The purpose of the justification is to increase the likelihood that the sponsor will award the administrative cost and to ensure adequate funding.
An adequate budget justification helps administrators, auditors, and sponsoring agencies to easily understand the nature of the costs and why they are allowable under the regulations.
The justification should include the following.
- A description of the administrator’s role tailored to sponsor specific requirements and the specific project or activity
- Why the activity qualifies as integral to the project
- How the administrator’s effort relates to and benefits the project
- The level of effort expressed as a percentage FTE or person months per sponsor instructions
- The time period(s) in which the person will be working
- Any other information that will aid the sponsor in evaluating and funding the proposed salary
- In addition, you must establish that the project being proposed meets the Stanford policy requirement for integral costs
NOTE: Although NIH modular grants or similar grant instruments do not require line-item justifications, the personnel, including administrative salaries, do need to be described in a modular budget justification.
Sample Budget Justification
The PI has included effort for administrative salary that is integral to the project, and not for general support of the academic activities of the faculty or department. Effort charged to this project can be specifically identified to the project.
Then you proceed to describe how the administrative role is integral to the project.....
The Office of Sponsored Research (OSR) blocks administrative charging on federal awards unless the proposal met the criteria in Stanford Policy and the sponsor did not disallow the costs.
Alternatives to Direct Charging
If the administrative salary does not meet the criteria for “integral”, the salary shall not be proposed or charged as a direct cost to a federally funded sponsored project and shall instead be charged to a department or school PTA.
Specific Identification/Direct Assignment
A method of accounting for time, or percent of effort, is required in order to identify the benefit of the administrative and clerical personnel effort to the federal sponsored agreement. This requirement may be met by using the Labor Schedules (if the level of effort is consistent over extended periods of time), manual effort allocation, or another timekeeping process
Technical expenses must be charged directly to sponsored projects if the expense can be specifically identified and provides technical benefit. Direct charging of these costs may be accomplished through specific identification of the costs to the sponsored project or through service centers or specialized service facilities, as appropriate under the circumstances.
Examples of such technical expenses include:
- Salaries of PIs and technical staff, and related fringe benefits
- Laboratory supplies (e.g., chemicals)
- Telephone toll charges for calls related to the scope of work
- Animals and animal care costs
- Non-administrative computing costs
- Computing devices (see section on computing devices below)
- Travel costs related to the scope of work
- Specialized shop costs
- Specialized health and safety supplies, training, and services
Effective September 5, 2014, Stanford Policy allows proposals to include the new Uniform Guidance regulations on computing devices. Proposals submitted for federally sponsored projects expected to be awarded on or after December 26, 2014 must reflect the changes in computing devices as described below:
Computing Devices are machines that cost less than $5,0001 and are 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.
1There is no change in policy regarding treatment of items over $5,000. If the acquisition cost of a computer is greater than $5,000 (and has useful life of more than 1 year), it should be categorized as computing equipment. For the correct expenditure type click here. See the Property Management Manual for more information regarding capital equipment.
Charging computing devices as direct costs is allowable for devices that are essential and allocable (provide benefit), but are not solely dedicated, to the performance of a federal award. Such devices are also allowable if solely dedicated to the performance of a federal award
Federal sponsors may impose requirements for these costs to be included in the proposal budget and may require a budget justification. Until the federal agencies release specific information, budget justifications may be used at the discretion of the PI.
Direct charging computing devices to a non-federally sponsored project is appropriate if the computing device benefits the sponsored project. Some non-federal sponsors may have specific requirements for direct charging of computing devices. Such requirements need to be addressed in proposals.
Inventory tags may be affixed to computing devices at the discretion of the department; inventory tagging facilitates accountability, availability for reuse, and appropriate disposal.
Care must be taken when it comes time to dispose of computing equipment which has been used to store non-public data. Please follow University guidelines for disposition/transfer of computer equipment.
Computing Devices under $5,000 should use the ET 55116, Computers and Computing Devices.
Charging administrative costs for technical purposes has not changed and does not require the project to be “major” nor the expenditure to be “integral.” The allocable (benefiting), allowable and reasonable criteria are the same.
- How will a reviewer know that the administrative items I’m charging to the project are allocable?
Since the benchmark is no longer project based (i.e., Major Project) but transaction based (i.e., allocable to the project) it is important to articulate its need and benefit to the project in the transaction, itself (e.g. purchase order, Pcard transaction, reimbursement, etc.) Of course, this is true for all transactions, but especially so for administrative-appearing items.