Allowability of Costs on Federally Sponsored Projects

Circular A-21, Cost Principles for Educational Institutions, a policy statement issued by the Office of Management and Budget (OMB), determines the allowability of costs on federally sponsored agreements.

In accordance with Circular A-21, most federal awards may not charge as direct costs the salaries of administrative and clerical staff and items such as office supplies, postage, local telephone costs, and memberships.

OMB has issued an interpretation of Circular A-21 that explains when it may be allowable to charge administrative and clerical salaries directly. For instance, the costs for administrative or clerical support may be considered direct costs for projects requiring a level of service significantly greater than what is routinely provided by academic departments. Other exceptions are specific database management; individualized graphics or manuscript preparation; human or animal protocol, IRB preparations and/or other project-specific regulatory protocols; and management of large program projects involving multiple investigators. All costs in the above examples would also have to be easily and accurately identified with a particular project.

To comply with Circular A-21, all proposals to the federal government that include clerical and administrative salaries or office expenses should contain a justification for such expenses. Justification should be based on the functional needs of the project. Unless approved by the agency in writing, these items cannot be charged.

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