General purpose computer hardware and software should normally be treated as an indirect cost based on OMB Circular A-21 J.18.a.4, which indicates -

"General purpose equipment" means equipment, which is not limited to research, medical, scientific or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles."

General purpose equipment may be allowable on federal awards when an "unlike circumstance" exists as discussed in A-21 Exhibit C and Appendix A CAS 9905.502.  While OMB had provided examples on types of situations which create an unlike circumstance the determination of "unlike circumstance" is an institutional decision.  Appendix A indicates -

"All costs incurred for the same purpose, in like circumstances, are either direct costs only or indirect costs only with respect to final cost objectives. No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost of that or any other final cost objective. Further, no final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included in any indirect cost pool to be allocated to that or any other final cost objective."

While for many cost objectives the institution has the responsibility for determining whether to allocate specific costs as a direct or indirect cost, but for general purpose equipment (like administrative salaries and office supplies) OMB has designated the cost as indirect.  The implications for not treating such costs consistently in like circumstances rests upon the expectation that the failure to treat costs consistently in like circumstances results in charging computers as component of the F&A rate and as direct costs to grants.  The generally accepted foundation for the assignment of computer equipment as an indirect cost is due to the nature of computers and their use for general email, course development, analysis of data across many projects, and institutional administrative functions.

Situations where I have allowed for an "unlike circumstance" charging of computers directly to grants include -

 Laptops which will be used to conduct visual acuity tests for subjects in nursing homes (or any location remote from the institution) and where expectation that this use will be devoted primarily to the project or projects to which the cost is being allocated.

 Another example is when a computer is connected directly to a piece of scientific equipment that is used primarily on the associated project and analyses conducted using the equipment are downloaded directly to the computer.  If the piece of equipment is used in conjunction with multiple projects then proportional allocation of the costs must be considered in charging of the computer.

 I have also approved computers on projects which involved high end imaging analysis efforts which could not be conducted on the computers normally provided by the university and the computer needed would be in addition to the faculty members standard university supplied computer.

I have also approved software that is needed specifically for scientific analysis on projects, but typically have not approved the acquisition of word processing software.

A more challenging scenario is when you have a community service project, where additional staff are hired and working full-time on the project, and the staff need computers to carry out general activities related to the service project.  Other challenging scenarios are when faculty want software to facilitate the citation references in publications or a laptop to support remote work on the project and presentations or any situation where it would be difficult to assign primary use to only one project.

The bottom line for any of the situations is to ensure that file documentation exists to justify the foundation for purchasing the computers or software on the project in the event of an audit.  The only additional caution is some awards prohibit the acquisition of computers and/or equipment on grants.

While one might argue that as the prices for computers have dropped, many computer purchases do not fall into the institutional equipment definition, but in such circumstance it would be considered a general purpose item, much like office supplies, and still unallowable as direct charge.

A long answer for a painful subject for research administrators (in terms of explanation and need the for an "unlike circumstance" justification) and for faculty who want a computer.

My general approach with faculty is to talk with them about the need for the computer, the challenges with charging of computer costs and see if there is away to justify the charge.  In instances where an "unlike circumstance" does not seem to exist, it maybe easier to ensure that clearly and directly allocable scientific supplies are charged to the project rather than the department and bill the department of the computer.

On the time frame when a equipment may be charged to a particular project, typically it is difficult to justify any equipment charge in the last six months to 90 days of a project.  The challenge for purchases during this time frame is the need to present a "reasonable and allocable" assignment of the costs.  The position is that typically equipment purchased in the last 90 days of a project appears to be an effort to fully expend project funds, separate from the need to complete project objectives.  Exceptions could be when a competing continuation is expected to be funded and the equipment will be required for the continuation of the project, or the project could not be completed without the equipment and out sourcing the analyses is not economically feasible - justification which should be included in the file documentation for the allowability and allocability of the charge.  In a situation where a continuation is expected, but not forth coming, the charge probably should be transferred of the project at closeout.

Good luck and feel free to contact me if you have any questions.  You can reach me at 336-403-0854.

Kris Rhodes, MS, CRA

======================================================================
 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at http://www.hrinet.org (click on "Listserv Lists")
======================================================================