Hi Greg,

You should treat the entire cost of the subcontract as a direct cost in your institution's budget.  You will only charge F&A on the first $25,000 of the subcontract.  Here are two examples that may make it clearer -

If the subcontract is $12,000 direct cost and $6,000 in indirect the total cost in year one for budget purposes is $18,000.  You will apply your F&A to entire $18,000.

If the subaward is the same in year two, you should only charge F&A on $7,000.

I assume you are with a non-profit the referenced for the subaward cap on F&A recovery is addressed in A-122 D.3.f under the Multiple Allocation Method for distributing F&A discussion.  The key is that the circular does not reference just direct cost as the base for distributing, it states the first $25,000 of the subaward.

Kris Rhodes
Associate Director
Office of Sponsored Projects Administration
University of Kentucky

-----Original Message-----
From: Research Administration List on behalf of Doyle-Wandell, Greg
Sent: Wed 9/22/2004 5:15 PM
To: xxxxxx@HRINET.ORG
Cc:
Subject: [RESADM-L] Subcontractor Costs

	Hi

	I'm working on a R01 application and need some help answering a question
	about how to treat subcontractor's F&A.  The question is: do I treat the
	subcontractor's total expenses (direct and F&A) as my direct expense, or
	just their direct costs?

	Thanks

	Greg

	============================
	Greg Doyle-Wandell
	Director of Sponsored Programs
	J. Craig Venter Institute, Inc.
	9704 Medical Center Drive, 4th Floor
	Rockville, Maryland  20850

	Phone: (240) 268-2755
	Fax: (240) 268-4000

	Email: xxxxxx@venterscience.org

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