Direct charging of administrative costs
November 2024
The Office of Management and Budget (OMB) recently revised the Uniform Guidance framework for grants management, including allowing direct charging of administrative costs to federal awards in certain circumstances. Read on for guidance from Mizzou’s Sponsored Programs Administration.
Administrative costs such as salaries and associated benefits expense of administrative and clerical staff, office supplies, computing devices used for administrative functions, postage, local telephone costs (including monthly service charges) and membership dues are generally treated as indirect costs. However, in certain cases, costs normally treated as indirect may be charged directly to a sponsored program.
Direct charging of administrative costs to sponsored programs is covered in Title 2 of the Code of Federal Regulations, Part 200 (2 CFR 200) in Direct and Indirect (F&A) Costs, sections 200.412 through 200.414. The U.S. Department of Energy, National Institutes of Health and the National Science Foundation also refer to 2 CFR 200 as the authoritative source on cost accounting for grants and provide requirements for direct charging of administrative costs similar to those outlined below.
In instances where sponsored projects require personnel expenses normally identified as administrative costs, such costs may be charged to sponsored agreements as direct costs only when ALL of the following conditions are met (per 2 CFR 200.413, section c):
- Administrative or clerical services are integral to a project or activity.
- Individuals involved can be specifically identified with the project or activity.
- The costs are not also recovered as indirect costs.
Treatment of administrative costs as direct costs must be uniform across projects. Administrative costs may be budgeted as direct costs only if this type of cost is consistently treated as a direct cost in like circumstances for all other projects and cost objectives.
Examples of circumstances where administrative or clerical costs may be considered essential:
- Large, complex programs such as environmental research centers, engineering research centers and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.
- Projects that involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature and reporting.
- Projects such as conferences and seminars that require making travel and meeting arrangements for large numbers of participants.
- Projects focused on preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).
- Projects geographically inaccessible to normal departmental administrative services.
- Individual projects requiring project-specific database management, individualized graphics or manuscript preparation, human or animal protocols and multiple project-related investigator coordination and communications.
These examples are not exhaustive, nor are they intended to imply that direct charging of administrative or clerical costs would be appropriate under similar circumstances.
Please contact the Sponsored Programs Administration at grantsdc@missouri.edu with questions.
TikTok policy for federal contracts
September 2024
In September 2024, the University of Missouri System implemented a new research policy following a federal rule that prohibits the download and use of the TikTok application by university employees, students and volunteers who are performing services in connection with federal contracts on the same devices they use to perform federal contract work. See FAQs.
Uniform Guidance updates
September 2024
The Office of Management and Budget (OMB) is revising its Guidance for Grants and Agreements, now called the OMB Guidance for Federal Financial Assistance. This set of rules and regulations that govern the administration of federally funded projects — often called "Uniform Guidance" — reflects public comments received in response to the OMB Notification of Proposed Guidance published in October 2023 and comments received from federal agencies. In response, OMB is revising and updating the guidance to:
- Incorporate recent OMB policy priorities related to federal financial assistance.
- Reduce agency and recipient burden.
- Incorporate certain statutory requirements.
- Clarify sections from the previous version of the guidance that recipients or agencies have interpreted in different ways.
- Use plain language, improve flow and address inconsistent use of terms.
- Improve federal financial assistance management, transparency and oversight through more accessible and readily comprehensible guidance.
These changes were effective Oct. 1, 2024.
More information on the updates can be found in the Federal Register.
If you have questions, please contact Sponsored Programs Administration at grantsdc@missouri.edu.
Highlights: Uniform Guidance revisions
Subpart A – Definitions
Major revisions include:
- New thresholds for equipment from $5,000 to $10,000 and Modified Total Direct Cost (MTDC) subawards from $25,000 to $50,000; requires a revised negotiated Indirect Rate Agreement before limit goes into effect.
- Expansion of “intangible property” to include data, websites, trade secrets and intellectual property.
- Inclusion of “associated software” in “special purpose equipment.”
- New definitions for “participant” and “prior approval.”
- Replacement of “non-federal entities” with “recipient and subrecipient.”
- Replacement of “F&A” with “indirect costs.”
Subpart B – General
Major revisions include:
- Replacement of applicability table 200.101.
- Addition of exceptions authority to agencies for “statutory” reasons.
- Mandatory, prompt disclosure of any credible criminal violations, which must be sent in writing to the federal sponsoring agency, OIG, PTE, and include a high standard for reasonable grounds to believe, FAR 73 FR 67064.
Subpart C – Pre-award
Major revisions include:
- Requirement for agencies to streamline the Notice of Funding Opportunities (NOFO).
- An updated “fixed amount award policy.” The revision increases the threshold to $500,000 from $250,000, adds that grantees are entitled to any unexpended funds and confirms that “unexpended funds are not considered profit.” However, the use of fixed amount awards by the grantee still requires prior approval.
- Clarification of the use of prohibited telecommunications and video surveillance by some Chinese companies — although the costs are not allowed on federal grants, its use is permitted if purchased with non-federal funds.
Subpart D – Post-award
Major revisions include:
- The addition of two sections on discrimination based on sexual orientation or gender identity.
- No longer allowing inclusion of voluntary uncommitted cost sharing in the MTDC base for calculating the indirect rate in negotiations.
- More flexibility on what to do with unused supplies.
- Equipment threshold increase from $5,000 to $10,000 (requires a revised Negotiated Indirect Rate Agreement before limit goes into effect).
- Allowing Native American tribes to follow their own procurement rules.
- Allowing the use of project labor agreements.
- No longer prohibiting use of geographic preferences.
- Addition of veteran-owned businesses and green products.
- Fixed price award threshold increase to $500,000.
- Elimination of termination flexibility by federal government.
Subpart E – Cost rate principles
Major revisions include:
- Removal of prior approval requirements for nine expenditure items.
- Allowing report of rate disputes to OMB. For example, grantee waits for rate negotiation with DHHS. The agency wants to limit the rate. Grantee can approach OMB.
- Reiteration of the use of federally negotiated indirect rate.
- Raising de-minimis rate to15% of MTDC.
- Requirement that subrecipients submit certification to pass-through entities.
- Elimination of DS2.
- Unused Paid Time Off balance now allocated as General Administrative Costs.
- Allowing conference awardees to provide dependent care for participants.
- Allowing prizes in some situations.
- Allowability for “data and evaluation costs.”
- Allowing “closeout costs” until report due dates – 120 days after project's end.
Subpart F – Audit
Single audit threshold raised from $750,000 to $1 million.
Administrative changes
- Changes such as prior approval requirements, new procurement standards and mandatory disclosures (with credible evidence) are effective for all federal awards that start on or after Oct. 1, 2024.
- Revisions that require changes to institutional policies will go into effect the following fiscal year.
- Changes to how the MTDC is calculated go into effect following the next F&A negotiated rate. Examples:
- Recovering F&A on the first $50,000 of subaward expenditures.
- Changing the threshold for equipment to $10,000.
- MU is currently working to negotiate our F&A rate with DHHS.
Source: “The Final Reveal” Gil Tran, Attain Partners; “Extreme Makeover” Gil Tran and Mark Davis, NCURA Magazine, Volume 56, No. 4