"Administrative expenses" are salaries and related benefits of those employees who perform non-technical support activities, and supplies and other expenses used to provide clerical or administrative project support. Examples of administrative expenses are the salaries, wages, and fringe benefits of administrative and clerical staff; office supplies; postage; local telephone costs; and memberships. Such costs are normally included in F&A (indirect) costs, but may be charged directly to a government sponsored project if it is a major project and the cost meets the remaining policy criteria.

"Technical expenses" are costs that provide direct benefit to a sponsored project's scientific or technical scope of work. Some examples of technical expenses are the salaries, wages, and fringe benefits of the PI(s) and technical or research employees; laboratory supplies; telephone toll charges; animals and animal care costs; non-administrative computer costs; travel costs; and specialized shop costs. (See questions 9 through 15 in the Q&A section for examples of costs normally considered administrative that, when used for a project's scope of work, should be charged as direct costs to the project.)

"Major project or activity," as defined in A-21, is a project or activity that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments. Major projects/activities are those that are administratively intensive and are not necessarily defined by the amount of funding.

"Non-major project or activity" is a project or activity that is not administratively intensive and only requires the level of administrative or clerical support that is routinely provided by academic departments. An aspect of the non-major concept is the limited ability to measure or quantify administrative effort provided to a specific project/activity. Some elements and examples of non-major projects/activities are:

• No extraordinary data collection requirements

• NIH Career Development (K) Awards

• NASA Training Grants

• NSF awards that support one PI and one or two graduate students (however, other circumstances may make the project major)

"Direct costs" are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity; or that can be directly assigned to such activities relatively easily and with a high degree of accuracy.

"Facility and Administrative (F&A) or indirect costs" are those costs that are incurred for common or joint objectives, and therefore cannot be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity.

"Specifically identified" means that the cost or effort in question can be directly linked to and directly benefits a sponsored project or activity in the same proportion as the amount charged.

"Pooled allocation method" means a process that collects or "pools" the costs of the labor of multiple employees or supplies and expenses, and then allocates the pooled costs to multiple sponsored agreements based on some common characteristic, such as modified total direct costs, square feet, or some other criteria that reflect the relative benefit received by the projects.

"Rotation of costs" means a process of charging expenses to multiple sponsored agreements by rotating the charging of successive purchases from one agreement to another regardless of the benefit to the sponsored agreements. (Stanford policy disallows this practice.)

"Accounting for effort" means a documentation of effort through through the Oracle Labor Distribution System , or other effort allocation processes.

"Cost Sharing" means that portion of total project costs of a sponsored agreement borne by the University rather than the sponsor. According to the Stanford Cost Sharing policy, committed cost sharing is the amount of project costs that Stanford agrees to contribute as part of the performance of the sponsored agreement. Committed cost sharing becomes part of the Organized Research base upon which F&A rates are calculated.

Budget justifications are required for administrative costs that will be incurred for the direct support of a federal sponsored project. An overall budget justification that explains the activities that qualify the project as a major project must be included in the proposal as well as justifications for each category of administrative cost. (See example below of an overall budget justification.) After-the-fact budget justifications are allowable when approved by the sponsor. It is the responsibility of the PI in conjunction with knowledgeable departmental administrators to determine whether a project is major.

The following are key elements that are to be included in budget justifications:

• A description of the expense or service

• How it relates to and benefits the project

• The anticipated cost

• The time period in which it will be utilized

• Any other information that will aid the sponsor in evaluating and funding the proposed item of cost

When writing budget justifications for categories of administrative costs, the amount of detailed information in the justification should be tailored to sponsor-specific requirements and the specific project or activity. For personnel and other expenses, explain the function of the position or cost as it directly relates to and benefits the project. Be sure to include project specific details to highlight the activities that make the project administratively intensive and thus a major project. When such costs are explicitly listed and justified in the sponsor-accepted budget, grant/contract administrators, auditors, and sponsoring agencies can easily understand the nature of the costs and their allowability under the regulations. The primary purpose of a justification is to provide support for the funds requested to ensure adequate funding. Experience has shown that including budget justifications in the proposal increases the likelihood that the sponsor will award the administrative cost.

Sample Budget Justification

This project is major, as defined by OMB Circular A-21, and meets government requirements. It is major because ______________________________

(e.g., it will require the accumulation and distribution of large quantities of real-time data from Stanford University to other institutions and collaborators).

The Principal Investigator will require administrative support to ensure meeting the goals of this project. All personnel effort and expenses charged to this project will be for services specific to the project and not for the general support of the faculty or the academic activities of any University department. In addition, all effort charged to this project can be specifically identified through an effort allocation system such as that reflected on a ___________________________________

(e.g. Lab Time Card, other).

Note: Only include information that is applicable to and accurate for your project.

I have a non-federal sponsored project that requires administrative effort and supplies. Do I need to meet all of the policy criteria in order to charge them as direct costs to the project?

No, you do not need to meet all the policy criteria to charge administrative costs directly to non-federal awards. The policy is applicable to federally sponsored awards and only to non-federal awards when the non-federal sponsor:

• receives federal funding for the project, or
• specifically adopts A-21 guidelines, or
• has its own policies restricting administrative charges.

The costs must still be specifically identified to and benefit the project.

One of the projects in my department is to develop an electronic encyclopedia on a website that will be maintained on an on going basis. Do you think this would classify as a major project? Some of the activities that seem administratively intensive are communication with and coordination of several board members and many contributing authors, managing their computer accounts and entries, providing HTML support to the authors, literature retrieval, word processing input, and maintaining the website.

Yes, your project is a major project under, A-21 example 4, whose primary focus is the preparation and production of manuals and large reports, books, and monographs. The activities you mention make this project administratively burdensome and therefore major. All of the administrative activities that are intensive can be charged direct.

I have a project in the Medical School that uses animal subjects. According to the definition of major, a project with human or animal protocols is considered a major project. I am not sure whether my project is administratively intensive because the research associate assigned to the project, not an administrator, manages all the work associated with the animal protocols. Is my project major?

Even though OMB Circular A-21 and Stanford's policy lists projects with animal or human subject protocols as projects that may be major, the project must also be administratively intensive in order to classify as a major project. In your case, the research associate who is conducting the animal protocols and applying their technical expertise to the procedure is already being charged directly to the project. The fact that your project requires animal protocols does not make it administratively intensive, and therefore does not make your project major. However, if an administrator conducts the animal protocol activities and you consider that effort to be administratively intensive, your project may be major. There may be other conditions that may make your project major and related administrative costs that may be charged direct.