GIM 22
Attachment A
A Primer on Facilities and Administrative Costs
3. What is the distinction between direct and F&A costs?
Circular A-21 states that, "direct costs are those costs that can be
identified specifically with a particular sponsored project... relatively easily
with a high degree of accuracy." By contrast, "F&A costs are those that are incurred
for common or joint objectives, and therefore cannot be identified readily and
specifically with a particular sponsored project, an instructional activity, or any
other institutional activity." F&A costs are those involving resources used mutually
by different individuals and groups, making it difficult to assess precisely which
users should pay what share. Direct costs are easily assigned to a specific research
project and paid by its direct grant funding.
In some cases it is easy to make this distinction. For example, if an investigator
has to buy a chemical for a specific experiment, then that clearly is a direct cost
to the grant. On the other hand, an investigator's use of electrical power, water
and other utilities, or the services of the purchasing and accounting offices, are
not normally charged directly because it is not practical to account for them
separately. Installing individual meters to monitor usage levels of electricity, and
carrying out the associated accounting and billing functions, would probably cost as
much as the electricity itself.
Attributing an appropriate F&A cost amount for the use of research space for
grant-related activities can be even more difficult. If, as is typical, a building
houses dozens of investigators who are involved individually and collectively in
teaching, research, public service and other functions, determining the building
costs that should be attributed to a particular faculty member's research projects
is not practical. For example, each faculty member may have several grants, which
may use common space differentially. Although one could imagine a means of
attributing a cost for the repair of a section of the roof (which may last 20 to 30
years) to a specific grant, it has generally been agreed that using a more
macroscopic and statistically averaged method is much more sensible and cost
effective. The basis for distributing space related costs is an annual space study.
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