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Revised Direct Charging of Costs for Federal Grants, Contracts and Cooperative Agreements: View Dean Nagel's September 1997 Revised Federal Costing Principles Memorandum for guidance in implementing the new principles contained in OMB Cicular A-21.

See below ORAA's "Guidance for PIs on OMB Circular A-21," a short document that will assist Maryland PIs in following this new policy.

Full text of OMB A-21:(HTML|PDF)

Disclosure Statement Approval Letter : (PDF)

Guidance for Principal Investigators on OMB Circular A-21

"UMCP Policy for Direct Charging of Costs to Federal Grants, Contracts, and Cooperative Agreements" UMCP Policy VIII-10.40(A)

In response to changes made in the Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions, a policy was developed to provide institutional standards for determining how costs are charged to federally sponsored projects. This required policy, VIII-10.40(A), changes some of the ways Principal Investigators budget for and expend administrative support costs directly related to their funded projects. These costs, which include administrative and clerical salaries and other costs such as office supplies, postage, local telephone costs, etc., are normally not allowable as direct costs. This document provides additional information which is intended to assist Principal Investigators in following this new policy.

Proposals:

	New, renewal and continuation proposals must use the university's new procedures for direct charging when developing budgets.
	If any of these administrative costs are expected to be supported by your sponsor, they must be explicitly budgeted for and justified within the proposal. The justification must accompany the budget to be endorsed by the University.
	Budgeted and justified salaries for clerical and administrative support must represent a significant level of effort. As defined in the policy, it is not to be less than 10% effort (at least one half day a week).
	Section II.A of the policy lists examples of circumstances where direct charging of salaries may be appropriate. The special circumstances need to be justified to the satisfaction of the OMB Circular A-21.
	Principal Investigators will need to review the budgets of university subcontractors paid under federal grants or contracts in which we are the prime contractor, since subcontractors are subject to the same OMB Circular A-21 rules.

Existing Projects:

Principal Investigators administering a grant or other agreement in which the direct costing of clerical, administrative salaries or other costs have been denied by the federal sponsor will not be allowed to transfer such costs to that grant or agreement either through the internal university procedure (University Prior Approval System (UPAS)) or through the university financial system cost transfer process.

Direct costing of administrative support costs which were not originally anticipated in the approved budget may be charged to accounts only if justification is on file and costs are specifically authorized by the sponsor. In most cases this will require a letter of request, countersigned by ORAA, to the sponsor's contract/grants office.

Caution Tips: Federal regulators have stated that sponsor approval of budgeted items does NOT deem these items allowable unless there is also the appropriate justification for the direct charging of these administrative support costs.

Principal Investigators and their Departments are responsible for assuring that costs assigned to federal projects are appropriate. Restricted cost categories and other inappropriate charges can be readily detected in audits, resulting in disallowances which must be reimbursed to the federal government.

Browse UMCP Policy VIII-10.40(A) in full .

All questions regarding these university policies and procedures should be directed to Anne Geronimo, (301) 405-4178, geronimo@umd.edu.

Updated October 2006