Effective July 1, 1994 there will be three changes in OMB Circular A-21 that will have a direct impact on day-to-day grant and contract activities on federal and federal pass-through projects.

1. The U.S. Department of Health and Human Services (DHHS) has stated that we must comply with the requirement to collect indirect cost on the first $25,000 of each subcontract. Please include indirect cost on the first $25,000 of each subcontract on proposals effective immediately. For Grants with a multi-year project period the $25,000 applies only once for the period.
2. OMB Circular A-21 states that "salaries of administrative and clerical staff should normally be treated as indirect costs. Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity." This does not include salaries of technical staff which are still allowable as direct costs.

   If your budget includes the direct charging of administrative or clerical services, it should be for non-routine functions or those that are clearly above what would normally be expected on a project. Before submitting the proposal, take the following action.

   A. Talk with the program office at the agency to see how they interpret the regulation and if direct charging of the cost will be approved.

   B. In the budget justification, document why administrative or clerical personnel will be required for the non-routine activities.

   If the funding agency approves the administrative or clerical services as a direct cost in the award document, charges will be allowed by the University as a cost to the project up to the amount approved. Any charges in addition to those approved in the budget will require written approval of the funding agency. This includes all personnel performing administrative or clerical functions whether they are paid monthly, biweekly, or hourly.

3. OMB Circular A-21 also states that "items such as office supplies, postage, local telephone costs and memberships shall normally be treated as indirect cost." If something is truly office supplies, it should not be charged as a direct cost to federal or federal pass-through funds. If it is being used in the research, code it research or laboratory supplies.

Postage should not be charged to these projects unless the project is one requiring large amounts of mailing such as questionnaires. Then only postage for the large mailings should be charged directly. Telephone line charges and memberships should also not be charged directly.

If you need further information please contact one of the offices listed below. A more detailed document explaining these changes is also available through these offices.