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FEES Charged by Non-Profits under A-122 Brian Prindle 14 Jun 1995 08:35 EST

For Group Discussion:

Recently I have received two subcontract proposals from Non-Profit
Organizations who are under the cost principles outlined in OMB Circular A-122.
Both subcontractors have negotiated rate agreements with the feds. The
subcontractors budgets are comprised of the traditional Direct Costs and
Indirect Costs, but then a "Fee" is charged as a percentage of the Sub-total
(in this case subtotal is the Direct Costs + Indirect Cost).

I have had discussions with the subcontractors about the allowabilty of a Fee
as a non-profit and both say it is allowable, there auditors have approved
this, and its normal practice to include a fee in most propsoals going to a
federal or non-federal source.

My question for the group is:

Can a Non-profit under OMB Circular A-122 include a Fee above and beyond Direct
and Indiect Costs? Is this reasonable? If yes, why?. I see no where in A-122
that indicates this is allowable, nor do I see where A-122 states is is not
allowable.

Certainly Non-Profits such as a University or Colleges which are covered by OMB
Circular A-21 cannot include a fee. So what is the difference here? The
language of A-122 is very similar to A-21.

If an award is made, and the fee remains would a cost plus fixed fee type
subcontract be appropriate?

Any feedback would be great.

Brian Prindle
Sponsored Programs
Boston University

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