The principles of OMB Circular A-21 govern costs that may be charged to
or paid, even in part, by federal funds. A-21 principles apply both to
costs that will be paid directly from sponsored awards or indirectly via
the institution's Facilities & Administrative Reimbursement Rate. A-21
requires that all costs being charged to the federal government pass the
following three tests:
The cost must be allowable under
both the provisions of A-21 AND under the terms of a specific award.
The cost must be allocable; that
is, the expense can be associated to a project with a high degree
of accuracy. See below for a discussion of appropriate methodologies
to match the benefit of an expenditure with the sponsored project.
The cost must be reasonable, that
is the cost reflects what a "prudent person" would pay in a like circumstance.
B. Unlike Purpose and Circumstances Criteria
Further, A-21 identifies specific costs that may not be charged directly
to research or training sponsored awards, except under special conditions.
Unless the special conditions apply, these costs must be paid from University
funds. These costs include many of the types of costs addressed in this
policy such as administrative salaries, postage and express mail, local
telephone, copier costs, general office supplies, etc. There are three
criteria under which costs generally considered to be indirect may be
allowable as direct costs. All three criteria
must be met.
Unlike circumstances exist, that
is, this particular sponsored award is different from typical sponsored
awards at the University.
This cost can be associated with the
specific sponsored project with a high degree of accuracy.
The awarding agency has approved
charging the cost as a direct cost in this awarded budget. (In the
event an expense meets the first two criteria but not the third because
it was not foreseeable at time of budget submission (e.g., a book
not then yet published) seek guidance as indicated above). Note: This
criterion will not apply when a modular budget does not require a
detailed line item budget - although criteria one and two will apply.
Note that if the unlike circumstances are not substantiated in practice,
then the usual A-21 rules apply and the costs must be treated as indirect
and paid from PI discretionary, departmental funds or the department
budget.
NOTE: At Harvard, we have defined all non-federal
awards as "different purpose and circumstances" under the provisions
of Section F(6)B in OMB Circular A-21. There are two reasons why
we have done this:
Non-federal awards, in most cases, do not pay full overhead.
Non-federal awards will often allow for costs typically deemed
"indirect" to be charged directly to the project.
