Federal sponsors require that direct costs of research be related to specific actions support by a contract or grant. These costs must be reasonable and necessary, not exceeding the costs that would be incurred by a prudent person; and they must be allowable, allocable, and easily identifiable as a benefit to the project. Because institutions provide infrastructure support that is not easily identifiable with specific projects, they are allowed to apply Facilities and Administrative (F&A; formerly indirect costs) support costs to grants and contracts on an average rate basis to help offset the infrastructure costs. Tennessee Tech’s F&A rate is negotiated with the U. S. Department of Health and Human Services. The cost pools used to determine TTU’s rate includes items such as utilities, depreciation, library services, sponsored program administration, and a portion of departmental and central personnel. Because TTU is reimbursed for these administrative supplies as a part of the F&A rate, the costs of these items cannot be charged as direct costs.
Tennessee Tech follows the sections D and E in OMB Circular A-21 in determining the treatment of costs as direct or indirect. TTU’s F&A costs are consistent with the definitions of specific F&A cost categories in section F of OMB Circular A-21. The following criteria must be considered in determining the allowability of a cost charged to grants and contracts:
It is the responsibility of TTU to determine the allowability of direct costs to a grant, contract, or other sponsored project. The principal investigator/project director is responsible for determining the need for the costs included in the project budget and providing justification for each charge. Prior to submitting the proposal, the Office of Research will review the project budget and justification for adherence with OMB Circular A-21 guidelines.
The principal investigator/project director and their project bookkeeper are responsible for assuring that costs assigned to projects are appropriate. Requests for direct charging of items normally considered to be F&A costs should be address to the Office of Research. The Office of Research will be responsible for review and approval of any exceptions to the policy.
For a detailed list of allowable and unallowable costs on grants, click here