I thought I'd pass this along for your information.

----------------------------Original message----------------------------

 February 23, 1994

Mr. Norwood J. Jackson, Jr.
Chief, Financial Standards and Reporting Branch
Office of Management and Budget
New Executive Office Building, Room 10235
725 - 17th Street, N.W.
Washington, DC  20503

Dear Woody:

Enclosed is our recommended final interpretation of the treatment of clerical an
administrative salaries under the July 1993 revision of Circular A-21.  The
proposed final interpretation is essentially the same as the draft we discussed
at our meeting with the principal funding agencies on January 7.  Some
modifications to the language have been made in response to suggestions from the
agencies and the Council on Governmental Relations, but the substance has not
been changed.

As indicated in the enclosed letter from the Executive Director of the Council
on Governmental Relations*, the membership of the Council supports the
interpretation, although they continue to oppose the A-21 provision that made th
interpretation necessary.  They also suggested a number of modifications to the
language, most of which have been incorporated in the final document.  The
Council would like to see the interpretation issued as soon as possible.

Since the interpretation has the support of both the agencies and the university
community, we recommend that it be issued as soon as possible.  The simplest way
to accomplish this would be for your office to send the interpretation to the
agencies under a brief cover memo.  We will work with the agencies and COGR to
disseminate the interpretation to the institutions.

If you have any questions, please give me a call.

 Sincerely,

 Gary Talesnik
 Director
 Office of Grants Management

cc:   Milton Goldberg, COGR
 Geoff Grant/Dick Powers, NIH
 Luis Navarro, PHS
 Chuck Paoletti/Mike Kuc, ONR
 Bill Cole/Rick Hastings, NSF
 Frank McKune/Ted Tracy, HHS
 Directors, HHS Regional Division of Cost Allocation

(* not enclosed for purposes of E-Mail)
 2/23/94

 OMB CIRCULAR A-21

 TREATMENT OF ADMINISTRATIVE AND CLERICAL SALARIES

Question

Section F.6.b. of the July 1993 revision of Circular A-21 says that the salaries
of administrative and clerical staff should normally be treated as indirect
costs.  This section goes on to say that direct charging of these costs may be
appropriate where a major project or activity explicitly budgets for
administrative or clerical services and the individuals involved can be
specifically identified with the project or activity.  What is the intent of thi
provision and under what circumstances may these costs be directly charged to
sponsored agreements?

Answer

This provision is intended to establish the principle that the salaries of
administrative and clerical staff should usually be treated as indirect costs,
but that direct charging of these costs may be appropriate where the nature of
the work performed under a particular project requires an extensive amount of
administrative or clerical support which is significantly greater than the
routine level of such services provided by academic departments.  The costs woul
need to meet the general criteria for direct charging in Section D.1. -- i.e.,
"be identified specifically with a particular sponsored project... relatively
easily with a high degree of accuracy," and the special circumstances requiring
direct charting of the services would need to be justified to the satisfaction
of the awarding agency in the grant application or contract proposal.

The following examples are illustrative of circumstances where direct charging
the salaries of administrative or clerical staff may be appropriate.

o     Large, complex programs, such as General Clinical Research Centers,
 Primate Centers, Program Projects, environmental research centers,
 engineering research centers, and other grants and contracts that entail
 assembling and managing teams of investigators from a number of
 institutions.

o     Projects which involve extensive data accumulation, analysis and entry,
 surveying, tabulation, cataloging, searching literature, and reporting,
 such as epidemiological studies, clinical trials, and retrospective
 clinical records studies.

o     Projects that require making travel and meeting arrangements for large
 number of participants, such as conferences and seminars.

o     Projects whose principal focus is the preparation and production of
 manuals and large reports, books and monographs (excluding routine
 progress and technical reports).

o     Projects that are geographically inaccessible to normal departmental
 administrative services, such as seagoing research vessels, radio
 astronomy projects, and other research field sites that are remote from
 the campus.

These examples are not exhaustive nor are they intended to imply that direct
charging of administrative or clerical salaries would always be appropriate for
the situations illustrated in the examples.  Where direct charges for
administrative and clerical salaries are made, care must be exercised to assume
that costs incurred for the same purpose in like circumstances are consistently
treated as direct costs for all activities.  This should be accomplished through
a "Direct Charge Equivalent" or other mechanism that assigns the costs directly
to the appropriate activities.