In reviewing OASC-3, 45 CFR 74 Appendix E, "Principles
for Determining Costs Applicable to Research and
Development Under Grants and Contracts with
Hospitals."  I came across the following statement in
IX.B.17

"17. Losses on research agreements or contracts. Any
excess of costs over income under any agreement or
contract of any nature is unallowable. This includes,
but is not limited to, the hospital's contributed
portion by reason of cost-sharing agreements,
under-recoveries through negotiation of flat amounts
for overhead, or legal or administrative limitations."

This section appears under the "General standards for
selected items of costs" which states "These standards
should apply irrespective of whether a particular item
of costs is properly treated as direct costs or
indirect costs"

So based on my read of the Section 17, cost share and
over expenditure are to be treated as an unallowable,
and excluded from the direct cost pools.  This logic
does not work with my brain, am I missing something
here?  I know the intent of the clause, but I don't
think that is what the clause says.

Kris

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