Michael Ludwick is very concern about the in-appropriateness of applying
such admin fee as direct cost on those instances where a funding agency
will not fund a project overhead expenses. Quoting A-21, Michael says that
"if a cost is in an institution's indirect cost, the cost cannot be charged
as a direct cost; otherwise, your are double dipping..." This thesis is
also supported by James Beall.
I agree with Michael to some degree. However, I want to probe more on the
forest and less on the trees. Yes, the consistency rule must prevail in
order to avoid the double dipping. Yes, we may charge an Admin Fee as a
direct cost to the project when the funding agency does not pay for overhead
costs. However, once the charge is made to the project, you must not apply
the overhead rate of this amount; furthermore, the next time you submit your
indirect cost rate proposal, exclude this amount from the MTDC base for
research (treat this cost as an unallowable cost). Yes, you don't have to
be deceitful, tell the agency that at least they should fund the admin
portion as a direct cost (this approach really does is to apply a waterdown
overhead rate; as a matter of fact, the admin fee may be set equal to the
admin rate component of your negotiated indirect cost rate; for major
research institutions this is probably 26% of MTDC of the project).