The University Record, September 19, 1994

Dialogue with feds on indirect costs results in new flexibility

By Mary Jo Frank

Recent conversations between leaders in higher education and Office of Management and Budget (OMB) officials about the way funding agencies handle some costs for federally-sponsored projects are paying off for University researchers, according to the Office of the Vice President for Research (OVPR).

Of primary concern early this summer were salaries of administrative and clerical staff, and such items as office supplies, postage and local telephone costs.

Due to a change in federal regulations regarding the support for administrative staff and office supplies, which went into effect July 1, salaries of some support staff that had been charged directly to sponsored projects in the past now have to be treated as indirect costs.

The change in regulations affected in particular the U-M and other universities that exceed the 26 percent cap on administrative indirect costs previously imposed by the federal government. Universities already at or above the 26 percent cap cannot be fully reimbursed as part of their indirect cost recovery for basic administrative and clerical costs incurred in support of federally-sponsored projects.

Following meetings with representatives from OMB and administrators from large research universities, including Vice President for Research Homer A. Neal, OMB revised its interpretation of OMB Circular A-21, which deals with how administrative and clerical salaries are handled.

Judy Nowack, assistant vice president for research, says the U-M has “new flexibility in the system as a result of positive communication with individuals at the federal level who make the rules.”

The following examples illustrate circumstances in which direct charging of salaries of administrative or clerical staff now may be appropriate:

  • Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocol or other project-specific regulatory protocols; and multiple project-related investigator coordination and communications.

  • Large, complex programs, such as General Clinical Research Centers, Primate Centers, Program Projects, environmental research centers, engineering research centers, and other grants and contracts that entail assembling and managing teams of investigators from a number of institutions.

  • Projects that involve extensive data accumulation, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting, such as epidemiological studies, clinical trials, and retrospective clinical records studies.

  • Projects requiring travel and meeting arrangements for large numbers of participants, such as conferences and seminars.

  • Projects whose principal focus is the preparation and production of manuals and large reports, books and monographs (excluding routine progress and technical reports).

  • Projects geographically inaccessible to normal departmental administrative services, such as seagoing vessels, radio astronomy projects, and other research field sites that are remote from the campus.

    Even though the OMB has said principal investigators can make cases for administrative and clerical support costs, federal agencies sponsoring research still have to acknowledge and approve those charges, Nowack explains.

    The clarification is a direct response to universities’ concerns about the earlier, more narrow interpretation of Circular A-21, she adds.

    As the federal government works on cost containment, it will continue to turn its attention to universities doing federally sponsored research, Neal predicts.

    “We intend to keep working with officials in the federal government on issues related to the health and vitality of research on our campus,” Neal adds.