Stanford’s policy reflects OMB Circular A-21 and the Uniform Guidance that establishes the principle that salaries of administrative staff should normally be treated as Facilities and Administrative (F&A) or indirect costs.

The Uniform Guidance eliminates the major project criteria from A-21 for the direct charging of administrative and clerical salaries and now requires an administrative salary to meet the criteria of being integral to the performance of the sponsored project.

Costs which are incurred for the same purpose and in like circumstances must be treated consistently as either direct or indirect and consistently applied throughout the University. Consistency can be achieved simply by following Stanford’s policies.

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.

See RPH 15.4: Charging for Administrative and Technical Expenses.

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.

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.

Some examples of salaries integral to the project are listed below.

• Any grant mechanism that provides for an administrative core, such as NSF Engineering Research Centers, NIH program project grants, NIH Center grants such as the Spectrum Stanford Center for Clinical and Translational Research and Education, etc.
• Projects that require making travel and meeting arrangements for large numbers of participants, such as conferences and seminars.
• Projects that require monitoring and management of multiple subawards and/or foreign subawards
•  Administrator’s review of quarterly expenditure statements or annual payroll distribution  would not be considered integral for most sponsored projects. This activity may be considered integral for program project grants, projects that involve multiple faculty and/or multiple institutions, or projects with significant administrative complexity.

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.