The September 1, 1994 revision of Circular A-21 established the principle that administrative and clerical expenses are normally indirect costs. The Circular permits them to be charged directly to federal sponsors when:
- the expense is for the performance of one or more the of activities/projects defined as "MAJOR" (defined below)
- the expense is specifically identified with and directly benefits the project
- the expense is specifically budgeted and approved by the sponsor
- the expense is supported by an explicit budget justification in the project proposal.
Even if administrative costs are budgeted and allowed by the sponsor, they may not be charged directly to a federal sponsor except in the case of "major projects."
A-21 defines this term to mean "administratively intensive," where the nature of the technical work requires administrative/clerical support significantly above the routine level. A-21 provides several examples.
The proposal, and in particular the budget justification, are critical to the allowability of these types of costs. If you are proposing clerical/administrative costs, the proposal must state that the PI considers the project to be "major" (see sample language below) and the justification must be explicit and detailed.
. . . The PI has determined that this is a major project, as defined by OMB Circular A-21, and it meets A-21 requirements for direct charging of administrative expenses. All effort and expenses charged to this project will be for services specific to the project, and not for general support of the academic activities of the faculty or Department. In addition, effort charged to this project can be specifically identified to the project.
You are encouraged to discuss this subject with your research administrator, administrative support staff, or your Sponsored Project Office staff when preparing proposals that include such costs.