Charging for Administrative and Technical Expenses

This policy has been affected by the new federal Uniform Guidance regulations.

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.

Contact

Questions about this topic can be answered by:

Bible, Sara

Associate Vice Provost for Research

Vice Provost and Dean of Research

(650) 723-9050

About Administrative Charging

Federal Guidance on Direct Charging Administrative Salaries

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 Facilities and Administrative (F&A).

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 (RPH 15.4).

 Stanford Policy

Effective September 5, 2014, Stanford Policy required 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 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.
  4. A budget justification must be included in the proposal.
  5. The costs are not also recovered as indirect costs.

 

 

 

Direct charging of administrative or clerical salaries to a non-federally sponsored project is appropriate if the services benefit the sponsored project. Some non-federal sponsors may have specific requirements for direct charging of 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.

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Proposing Administrative Expenses

The Proposal Development and Routing Form (PDRF) will include this question for those sponsors coded as FEDERAL in our sponsor database (it will not appear where the concept of integral does not apply, e.g., non-fed sponsors:

Is this a Integral as defined by the Uniform Guidance, allowing administrative and clerical  salary expenses to be charged (Federally-Funded Projects only)?

In addition to answering “yes” to that question, you must also use language about “integral to project” in the Budget Justification section of the proposal.

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Effective Budget Justifications

When proposing administrative salaries, 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.
  • Explain why the activity that 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.

Proceed to describe how the administrative role is integral to the project.....

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Award Set-up

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.

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Project Management

One of the criteria for charging an administrative salary directly to a sponsored project is called specific identification. This requires a cost to be specifically tied to a particular sponsored project or activity. The administrator must show how the project benefited from the expense.

Documentation or a system is required to show items purchased were used only on that project. A method of accounting for time, or percent of effort, is required to identify the benefit of the administrative and clerical personnel effort to the federal sponsored project.

Allocability

Questions frequently arise regarding benefit and allocability; therefore further documentation may be necessary and is recommended. 

Documentation of allocability is done at the time the cost is incurred. It requires a methodology that allocates costs based on some common characteristic such as head count, square feet, or some other approach that reasonably estimates the benefit received by the projects. If actual usage deviates from the estimate when the cost is incurred the administrator should reallocate the expenses appropriately. Comments describing allocability to the project can be included on an iProcurement order. A method of accounting for supplies and expenses is required in order to identify the benefit of the supply or expense to the federal sponsored agreement. Clear justifications at the time of the charge and quarterly certification of expenses by the principal investigator are needed to meet this requirement.

If an individual cost specifically benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefit. If an individual cost specifically benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the cost may be allocated to benefited projects on a reasonable basis. This requires a methodology, documented at the time the cost is incurred, that allocates costs based on some common characteristic such as head count, square feet, or some other criteria that reflects the benefit received by the projects. The criteria shall be consistently applied regardless of the projects' available funding.

Administrative expenses may not be distributed or rotated among sponsored agreements. Departments shall not use any type of pooled allocation method to charge administrative expenses to federal sponsored agreements except from a service center with approved rates.

 

Some examples of administrative expenses include:

  • office supplies
  • cellular or other phone lines
  • PDAs
  • photo copying charges
  • bottled drinking water
  • home internet connections,
  • postage
  • memberships

These items are part of the F&A or indirect cost rate and should not be charged directly to federally-funded sponsored projects, unless they benefit the technical scope of work.

Example: I am doing research on the types of chemicals found in bottled water. 

The bottled water would be considered a technical supply and would be an allowable expense.  It must be coded as a technical supply not an office supply.

 

On projects where administrative costs can legitimately be charged directly, those expenses should be proposed and, if awarded, charged as appropriate. By using other funds to pay for those otherwise direct charges, we risk being inconsistent in the handling of clerical and administrative costs.

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