Office of Sponsored Programs - 300.08 - Direct Costs, Non-Personnel

Title

Office of Sponsored Programs - 300.08 - Direct Costs, Non-Personnel

Purpose

In assisting the University's departmental research administrators, this operating standard provides guidelines for budget planning of direct non-personnel costs in accordance with Federal regulations.

Policy Statement

In accordance with 2 CFR §200 Subpart E - Cost Principles, the Office of Sponsored Programs (OSP) requires the inclusion of non-personnel direct costs in proposed budgets.

The budget may include the following non-personnel costs:

• Capital Equipment
• Travel Expenses
• Subrecipient Costs
• Consultants
• Tuition
• Other Direct Costs

Accounts Payable (AP) is responsible for the acquisition of goods and services throughout the University; they provide invaluable information when planning proposal budgets, including University finance policies.

I. Capital Equipment

To be considered capitalized equipment and thus eligible as a direct cost, the proposed equipment must meet the definition of equipment and be listed separately in the proposed budget to prevent inclusion as general materials and supplies.

Before requesting new equipment, the Principal Investigator (PI) must determine that equipment already on hand or readily available will not meet the project’s needs and will not be available for use at the time it is required.

Specialized or Fabricated Equipment

When deemed necessary, the purchase of specialized or fabricated equipment is frequently considered allowable with advanced approval from the sponsoring agency. Requests to build or fabricate research-specific equipment must be identified in the proposal budget and justified with supporting documentation sufficient to obtain approval of the OSP Sponsored Projects Specialist (SPS), before submission of the proposal to the funding agency.

II. Travel

Travel is a direct cost budget item subject to the provisions provided in 2 CFR §200.474. Foreseeable travel directly related to and necessary for the research project may be included as a direct, non-personnel cost. Estimations can be calculated by selecting either the University’s travel allowance rates or the General Services Administration (GSA) rates, but not both. Once a method for estimating travel costs is selected, it must be implemented continuously throughout the course of the research project. Fluctuating between or combining both methods is unallowable.

University employees must also comply with University travel policies. Sponsor regulations and requirements may differ and take precedence.

If air travel is necessary using Federal grant funds, by Federal regulations of the Fly America Act, travelers are required to fly on a United States airline.

III. Subrecipient Costs

Subrecipient costs represent any portion of a sponsored project that is performed by another organization such as subawards and subcontracts. All direct and indirect subrecipient costs must be identified and justified in the proposal budget.

Outgoing Subrecipient Agreements

• The University must obtain the following information when enlisting another organization to provide services on a University-sponsored project:
  • Statement of work to be performed by the Subrecipient
  • Proposed Budget and Budget Justification for Subrecipient activities
  • One of the following documents that commit the subrecipient to the activities proposed:
    • Letter of Intent signed by the subrecipient’s Institutional Official
    • Signed PHS Form 398 Facepage or PHS Form 2590 Facepage (for NIH proposals only)
• Additional items as required by the specific proposal guidelines.
• The total costs for outgoing subrecipient agreements are considered and written as a direct line-item cost in the University’s proposed budget to the sponsoring agency.

Incoming Subrecipient Agreements

• These agreements are treated like incoming awards. The proposal package must be routed as an IPF in Research Administration Management System and eSubmission (RAMSeS) and include the University’s:
  • Statement of Work
  • Proposed Budget and Budget Justification
  • One of the following documents that commit the subrecipient to the activities proposed:
    • Letter of Intent signed by the subrecipient’s Institutional Official
    • Signed PHS Form 398 Facepage or PHS Form 2590 Facepage (for NIH proposals only)
  • Additional items as required by the specific proposal guidelines
• The total costs for an incoming subaward or subcontract must include applicable direct and indirect costs.

IV. Consultants

Consultants are independent contractors unaffiliated with the University, hired to provide specific services for a brief and limited period of time. Any person receiving compensation from Payroll Services as a University employee does not meet these criteria and therefore, cannot receive separate compensation as a "consultant" for a sponsored project at the University. This is also the case with collaborative efforts where the "collaborator" is a University employee. S/he is ineligible for compensation as a "consultant."

For budget estimations, compensation for a consultant is based on their salary and rate history for comparable services and is subject to funding agency guidelines. Compensation for consultants is expressed as a daily rate or a fixed amount for the services to be provided.

Although consultants can receive reimbursement for travel expenses, they are not eligible to receive fringe benefits and cannot be provided with supplies, administrative support, or other standard business items.

V. Other Direct Costs (ODCs)

ODCs, or remaining costs directly related to a project, must be described in detail in the budget and budget justification to support the amount of those costs.

Tuition Remission

• Tuition should be included for eligible graduate students in accordance with the Graduate School's Guidelines for tuition remission.
• Apply the appropriate tuition rate for the appropriate graduate program. Multiplying the percentage of effort by the tuition cost determines the tuition cost per employee.

Materials and Supplies

• Funds may be used to purchase appropriate lab and project-specific research supplies delivered on or after the beginning date of the project period and received sufficiently in advance of the end date of the project period to be used effectively on the project.

Facilities and Equipment Rentals

• Rental space within ten (10) miles of the University is paid from Indirect or Facilities and Administrative (F&A) cost receipts. If the location is further than ten (10) miles from the University and not owned by the University, the rent should be included as a direct cost in the budget.

Research Service Centers

• Costs for highly complex facilities operated by the University, such as specialized computers, wind tunnels, reactors, and the like, may be designated as direct costs.

Patient Care Costs

• Research patient care costs are the routine and ancillary services provided by hospitals to individuals participating in research programs. The costs of these services normally are assigned to specific research projects through the development and application of research patient care rates or amounts. Research patient care costs exclude:
  • Otherwise allowable items of personal expense reimbursement, such as patient travel or subsistence, consulting physician fees, or any other direct payments related to all classes of individuals, including inpatients, outpatients, subjects, volunteers, and donors
  • Costs of ancillary tests performed in facilities outside the hospital on a fee-for-service basis (for example, an independent, privately-owned laboratory) or in an affiliated medical school/university based on an institutional fee schedule
  • Data management or statistical analysis of clinical research results

Exclusions

To comply with 2 CFR §200 Subpart E guidelines, the University’s Cost Accounting Standards (CAS) Board Disclosure Statement (DS-2) specifies that clerical and administrative salaries, memberships, postage, subscriptions, telephone line (local) charges, and office supplies are treated as F&A costs.

Expenditures for these cost categories are not regularly charged directly to sponsored projects. Circumstances occasionally arise when these costs have such a specific relationship to the research being performed that their treatment as a direct cost may be considered an allowable exception. In these exceptional circumstances, the costs in question should be explicit, described in detail, and appropriately supported and justified in proposals and accompanying budgets.

Related Requirements

• Research Administration Glossary at Carolina
• 2 CFR 200 Subpart E - Cost Principles
• 2 CFR 200.474 - Transportation Costs

Unit Policies, Standards, & Procedures

• OSP Operating Standard 300.06 - Direct Costs
• OSP Operating Standard 300.07 - Direct Costs, Personnel

Contact Information

For questions regarding this operating standard and its related procedure, please contact SponsoredPrograms@unc.edu.

For questions regarding Pre-Award management or Post-Award administration, please contact the assigned SPS.

For invoicing, reporting and other financial matters, please contact the assigned Sponsored Projects Accountant.
OSP Staff assignments may be found in RAMSeS or on the OSP website.

History

The operating standards in the Office of Sponsored Programs Operating Standards & Procedures Manual supersede any OSP operating standards, procedures and appendices previously included in the University Business Manual, a publication of UNC-Chapel Hill’s Department of Finance and Budget.