Background
As a recipient of Federal awards, the University is obliged to comply with numerous rules and regulations promulgated by Federal agencies. Those agencies include the Office of Management and Budget (OMB), which sets forth broad policies governing grant and contract financial administration, as well as numerous individual agencies which award grants and contracts, such as the Public Health Service (PHS), and the National Science Foundation (NSF), which have their own agency-specific regulations for administering grants and contracts. Over the last two years, there has been a great deal of regulatory change aimed at limiting the costs which may be recovered either directly or indirectly through Federal grants and contracts. Periodically, the OMB revises its Circular A-21, Cost Principles for Educational Institutions, which sets forth principles for determining direct and indirect costs applicable to federally sponsored grants and contracts. The Circular includes language which prescribes the types of costs which should be treated as indirect costs, and therefore not customarily directly charged to Federal awards. The Circular specifically includes office supplies, postage and memberships as costs, which fall in this latter category.
Objective of the Policy
In promulgating this policy, the University aims to insure that it complies with the provisions of revised OMB Circular A-21 governing the allowability of administrative expenses as direct charges:
- by communicating Federal rules
- by providing guidance to faculty and staff in the application of these rules
- by setting forth levels of responsibility for ensuring compliance with these rules
Effective Date
This policy will be effective for all grant and contract awards (including continuation awards) made to the University by Federal agencies commencing on or after July 1, 1994.
Applicability
This policy governs every instance where any expenditure, or portion thereof, for office supplies, postage, memberships or similar administrative-type cost, is to be charged to a Federal grant or contract, whether awarded directly to Columbia as a prime recipient, or indirectly through a subagreement from another institution. It does not limit the support of such costs from non-federal awards or other funding sources; consult the policies of those agencies for such guidance.
Federal Requirements
Section F.6.b. of OMB Circular A-21, captioned Departmental administration expense sets forth the requirements. The section indicates that:
- "special care should be exercised to ensure that costs incurred for the same purpose in like circumstances are treated consistently as either direct or indirect costs."
- "Items such as office supplies, postage, local telephone costs, and memberships shall be treated as indirect costs."
The University's telecommunications offices charge all telephone costs directly to all users. This approach conforms to the requirements set forth above, and accordingly, charges for local telephone, along with all other telecommunications costs, should continue to be directly charged to all users, including, where appropriate, Federal grants and contracts.
Policy
In accordance with the Federal regulations, routine charges for administrative-type costs such as office supplies, postage and memberships may not be charged directly to Federal grants and contracts. There are, however, two major exceptions to this policy:
- the costs for office supplies, postage, memberships and similar costs relate specifically to the technical substance of the project
- the nature of the work performed under a particular project requires an unusually high level of such costs. The Principal Investigator and the academic department are responsible for insuring that only those administrative costs which are allowable in accordance with this policy are charged to government grants and contracts
Requirements for Charging These Costs Directly to Federal Grants and Contracts
The judgment as to whether a direct charge for these types of costs is appropriate for a particular award must be based on a facts and circumstances test, which considers the needs of the science; accordingly, such judgment can only be made by the Principal Investigator. In most cases, the Principal Investigator should be able to anticipate these expenditures, and accordingly, they should be explicitly budgeted. Agency approval will be assumed if the expenditures are budgeted and not specifically denied in the notice of grant award or in related correspondence from the agency to the University. Approval by the funding agency will be deemed to satisfy the Federal criteria for directly charging these costs to grants or contracts. Where the need to incur such costs directly on Federal grants or contracts has not been anticipated, and therefore not included within the project budget, the Principal Investigator must obtain written approval from the funding agency before charging those costs to a federal grant or contract.
Exception to the Policy
This policy does not apply to Institutional National Research Service or any similar awards which provide a fixed allotment of funds for institutional discretionary spending to support research training and which do not require discrete budgeting of the institutional support expenses.