SECTION D OF A-21

Section D, Direct Costs,  is a very short section within A-21 which receives very little attention.  This is mainly due to the fact that most problems are encountered with the F&A or indirect costs.  Before examining the F&A costs, lets look at what they are not, or in other words,  lets see what are direct costs.

A DIRECT COST is any cost that can be identified specifically with a particular sponsored agreement, or which can be assigned to one easily and with a high degree of accuracy.  Costs required to support a research project that would not be incurred except for the project are considered direct costs of the research.  When doing the budget for your research project, these costs need to be identified and justified. However, any cost that is incurred in other sponsored agreements must be treated the same - if direct, then direct;  if F&A then F&A.

To identify a cost as direct, the overriding guidelines are that it must be to identified with the sponsored work, not a relationship to the general nature of the goods or services.  Sound confusing?   Probably.........so lets look at some of the typical costs which are charged directly to a sponsored agreement: a.) an employee's pay for working on the sponsored agreement, including his/her fringe benefit costs.  b.) the cost of materials used to do the work and c.) other expenses which the sponsored agreement incurs - including things such as extraordinary utility consumption. 

Some costs for materials from stock supplies or services rendered MAY be included IF the items are consistently treated, in like circumstances, as direct instead of F&A costs.  Of course the key here is that we "ALL DO IT THE SAME"!  How do we know if we do it the same?. . . . check the DS-2, Disclosure Statement!

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