GAP NO. 200.330
Facilities and Administrative (Indirect) Costs on Sponsored Projects

I.	General
II.	Definitions
III.	Charging F&A Costs
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I. GENERAL

Per OMB Circular A-21 "The principles are designed to provide that the Federal government bear its fair share of total costs…" The mechanisms to accomplish this are Directs Costs as discussed in GAP 200.320, Direct Costing on Sponsored Projects and Facilities and Administrative (F&A) costs, previously known as indirect costs. The maximum F&A amount that can be charged to a federally-sponsored project is negotiated with the Department of Health and Human Services (DHHS).

 

II. DEFINITIONS

Government Definition of F&A costs:
According to OMB Circular A-21, F&A costs are "costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."

Examples include:

• Salaries, wages and fringe benefits for clerical and administrative positions not allowable as direct costs
  
  
• Departments such as procurement services or payroll services
  
  
• Memberships
  
  
• Subscriptions
  
  
• Library books
  
  
• Periodicals
  
  
• Office supplies
  
  
• Equipment
  
  
• Janitorial services
  
  
• Photocopying charges (for general business use)
  
  
• Postage
  
  
• Repair & maintenance
  
  
• Sanitation services
  
  
• Local telephone service
  
  
• Utilities, etc.
  

Government Definition of Direct Costs:
Direct costs are those costs that can be identified specifically with a particular sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy. GAP 200.320, Direct Costing on Sponsored Projects has specific information and procedures for charging sponsored project for Direct Costs. It is very important that expenses are appropriately charged.

Unallowable Costs:
For either F&A costs or Direct Costs OMB Circular A-21 identifies specific activities or transactions that are not allowed to be charged to sponsored projects, either as a direct cost or an F&A cost. The following costs have been specifically identified by the Government as unallowable on Government funded sponsored projects.

The list below is not all inclusive. Individual agency and program requirements may list other "unallowable" costs.

1. Advertising for general promotion of the University, including printed materials, promotional items, memorabilia, gifts, and souvenirs
   
   
2. Advertising for recruitment purposes that includes color or is excessive in size
   
   
3. Alcoholic beverages
   
   
4. Alumni or fund-raising activities
   
   
5. Antiques
   
   
6. Bad debt write-offs
   
   
7. Donations or Contributions
   
   
8. Commencement expenses
   
   
9. Cost Overruns; any costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
   
   
10. Costs on Industry, Foreign Government or Other Non-Government Grants/Contracts; any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally-sponsored agreements.
    
    
11. Decorative objects for private offices
    
    
12. Entertainment
    
    
13. Fine/original art
    
    
14. Fines and penalties
    
    
15. First-class/business-class air travel differentials
    
    
16. Flowers
    
    
17. Gifts, prizes, and awards
    
    
18. Goods or services for personal use
    
    
19. Lobbying
    
    
20. Memberships in airline travel clubs
    
    
21. Memberships in civic, social, community organizations or country clubs
    
    
22. Faculty and exempt staff salary in excess of base rates paid by the institution. Refer to 25 below for additional guidance.
    
    
23. Selling or marketing products or services of the University
    
    
24. Social events
    
    
25. Other limitations may apply, such as the Public Health Service salary cap.
    

In order to ensure that unallowable costs are not included in F&A, it is critical that all expenses are charged to the appropriate G/L account.

 

III. CHARGING F&A COSTS

All applications for sponsored research, education, and outreach (public service) projects will generally have associated F&A costs. These F&A charges are real expenses incurred in the conduct of projects and need to be recovered from the sponsor. It is expected that the standard F&A rate will be used in all applications. If the rate indicated is a non-standard rate, justification for the rate should be submitted with the Duke Proposal Approval Form and will be evaluated according to stringent guidelines by the Dean’s Office for the Medical Center (via the Office of Research Administration) and the Office of Research Support on behalf of the Provost for the University.

The University's standard rates are found on the F&A/Indirect Cost Rates webpage. The appropriate F&A rate is to be indicated on the Duke Proposal Approval Form, and should be used in the budget calculations.

Based on the agreed upon F&A rate and any specific details that apply to the award, the Office of Sponsored Programs calculates the F&A charge on a monthly basis as part of the month end process. The Post Award Administration Manual details this process.

 

GAP History
Issued:	April 2002
Revised:	February 2003