Cost Principles And Allowable Expenses 2

Cost Principles and Unallowable Costs MIT Research Administration Services

Our ability to obtain federal grants and contracts is dependent upon our performance in meeting federal requirements. Stanford generally applies these cost principles to the expenditure of non federal funds as well, however, in some cases non federal sponsors define allowable/unallowable costs differently than federal sponsors. (b) For off-site work, the DOE allows Home Office Expenses under architect-engineer, supply and research contracts with commercial contractors performing the work in their own facilities. Home Office Expenses may, however, be included for reimbursement under such DOE off-site architect-engineer, supply and research contracts, only to the extent that they are determined, after careful examination, to be allowable, reasonable, and properly allocable to the work. Work performed in a contractor’s own facilities under a management and operating or construction contract may likewise be allowed to bear the properly allocable portion of allowable Home Office Expenses. A cost is allowable if it is permitted as a cost within general federal and state regulations, the terms of a specific award, and/or the institution’s F&A rates.

Allowable and Unallowable Costs

These cost principles are based on the Uniform Guidance and the FAR, part of the Code of Federal Regulations (eCFR). (iii) Name of person on trip and that person’s title or relationship to the contractor. (ii) Appropriate downward adjustments from the maximum per diem rates would normally be required under these circumstances.

Generally, the compensation paid individual employees should be left to the judgment of contractors subject to the limitations of DOE-approved compensation policies, programs, classification systems, and schedules, and amounts of money authorized for wage and salary increases for groups of employees. However, the contracting officer shall designate a compensation threshold appropriate for the particular situation. The contract shall specifically provide that contracting officer Cost Principles And Allowable Expenses approval is required for compensating an individual contractor employee above the threshold if a total of 50 percent or more of such compensation is reimbursed under DOE cost-type contracts.

3102-546 Travel costs.

• Costs for transportation may be based on mileage rates, actual costs incurred, or on a combination thereof, provided the method used results in a reasonable charge.
• (i) At any time, in accordance with the contract terms and conditions, the contracting officer may pursue an advance agreement in connection with any cost item under a contract.
• (1) Costs incurred by contractor personnel on official company business are allowable, subject to the limitations contained in this subsection.

In providing this information or expert advice, the contractor shall indicate to the recipient that it is not presenting the views of DOE. Reasonable costs for transportation, lodging or meals incurred by contractor employees for the purpose of providing such information or expert advice shall also be reimbursable, provided the request for such information or expert advice is a prior written request signed by a Member of Congress. At Case Western Reserve University, adherence to four fundamental cost principles ensures fiscal responsibility and compliance across sponsored projects. These principles, including allowability, allocability, reasonableness and consistency guide the determination of appropriate costs for sponsored endeavors. For example, a conference is held in Seattle that focuses on the “El Niño” effect on global climate. Jane, a postdoc working on a related sponsored project, will present her paper and interact with colleagues from other academic institutions.

List of Unallowable Federal Activities

The trip will benefit the project, and the travel costs are therefore allocable to the project. Individuals directly involved with a project, particularly the PI, determine whether a cost is allocable to that project. In a case like this, when Jane’s department submits expense reports for reimbursement, the package should include the conference agenda or other documentation to support the relationship between the travel and the project which paid for it. Reasonable costs for transportation, lodging, or meals incurred by contractor employees shall be reimbursable. Cost principles are important because they establish a uniform and transparent approach to measuring, allocating, and reporting costs.

The approved justification required by paragraph (a)(3)(ii) and, if applicable, paragraph (a)(3)(iii) of this subsection must be retained. Cost principles refer to a set of guidelines or rules that determine how costs should be measured, allocated, and accounted for in financial reporting, budgeting, and pricing. These principles are designed to ensure that costs are recorded accurately and consistently, reflecting the true economic expense of producing goods or services. Cost principles are used in various industries, particularly in accounting, government contracting, and corporate finance, to ensure compliance with legal standards, financial reporting requirements, and cost-effectiveness. Department administrators are responsible for ensuring funds are available and that purchases adhere to cost principles.

3102-504 Bonding costs.

It also means the process of assigning a cost, or a group of costs, to one or more cost objectives, in reasonable and realistic proportion to the benefit provided or other equitable relationship. A cost objective may be a major function of the institution, a particular service or project, a sponsored agreement, or Facilities and Administration Cost activity. The process may entail assigning a cost(s) directly to a final cost objective or through one or more intermediate cost objectives.

Department of Energy Acquisition Regulation

Ultimately, everyone involved in sponsored projects must understand and comply with the cost principles outlined above. Every person in a school’s expense approval workflow is responsible for screening an expense for allowability and compliance with cost principles. (iii) If it becomes necessary to exercise the authority to use the higher actual expense method repetitively or on a continuing basis in a particular area, the contractor must obtain advance approval from the contracting officer.

However, contracting officer approved Laboratory Directed Research and Development costs and those costs incurred in support of the Department’s various reimbursable programs are allowable. (2) From time to time, the fee for a management and operating contract may not be adequate compensation for Home Office Expenses incurred for the benefit of the contract. An indication that such a case exists is the need for significant home office support to deal with issues at the site that occur without the fault or negligence of the contractor, for example, the need for home office legal support to deal with third party, environmental, safety, or health issues. (a) The Senior Procurement Executive is responsible for developing and revising the policy and procedures for the determination of allowable costs reimbursable under a management and operating contract, and for coordination with other Headquarters’ offices having joint interests. These principles, in conjunction with federal regulations, form the cornerstone of our financial stewardship, ensuring transparency, accountability, and compliance in all sponsored projects at Case Western Reserve University. Allowability, allocability, and reasonableness are defined and determined by the Office of Management and Budget (OMB), the sponsor’s requirements and/or College policy.

• (b) For off-site work, the DOE allows Home Office Expenses under architect-engineer, supply and research contracts with commercial contractors performing the work in their own facilities.
• Only the maximum per diem rates, the definitions of lodging, meals, and incidental expenses, and the regulatory coverage dealing with special or unusual situations are incorporated in this subsection.
• Unallowable expenses may NOT be charged either directly or indirectly to the federal government.
• (b) Travel costs incurred in the normal course of overall administration of the business are allowable and shall be treated as indirect costs.

Cost Principles and Unallowable Costs

Jane  is  not eligible for full reimbursement of this expense from Stanford either, although she can be reimbursed for a lesser, reasonable amount.

This helps businesses, governments, and other entities ensure that costs are accounted for accurately, reducing the risk of misrepresentation, fraud, or financial mismanagement. By following established cost principles, organizations can maintain consistency in their financial records and ensure compliance with regulatory and contractual requirements. (iv) Documentation to support actual costs incurred shall be in accordance with the contractor’s established practices, subject to paragraph (a)(7) of this subsection, and provided that a receipt is required for each expenditure of $75.00 or more.