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University
of California Office
of the President
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Chapter
5
Page 1 0f 13
Circular #21 |
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Contract and Grant Manual |
Issued:
April 23, 2004 |
COST SHARING
5-110 CONTRACTS
AND GRANTS OFFICERS' GENERAL RESPONSIBILITY
5-200 CONTRIBUTION OF DIRECT
AND INDIRECT COSTS
5-210 CONTRIBUTION OF DIRECT COSTS
5-220
CONTRIBUTION OF INDIRECT COSTS
5-300 TYPES OF COST SHARING/MATCHING
5-330 COMMITTED
COST SHARING/MATCHING
5-340
VOLUNTARY UNCOMMITTED COST SHARING
5-400 ALLOWABILITY OF COSTS SHARED
5-500 COST SHARING RECORDS AND REPORTS
5-510 COST
SHARING ON A PROJECT-BY-PROJECT BASIS
5-511
Cost Sharing Documentation on Subawards/Subagreements/Subcontracts
5-520 INSTITUTIONAL
COST SHARING
5-530 COST SHARING DATA
AND FACILITIES AND ADMINISTRATIVE
5-999 RELATED UNIVERSITY REFERENCES
EXTERNAL REQUIREMENTS--FEDERAL
5-F01 OMB Circular
A-110, ___.23, "Cost Sharing or Matching"
"Cost
sharing", also called “matching,” refers to the resources contributed or
allocated by the
University
(including non-University resources allocated by the University) to a sponsored
project
over and
above the support provided by the extramural sponsor of that project. It is the policy of the
University
that all work conducted under extramural funds shall pay “all expenses, both direct and
indirect” (Academic Personnel Manual APM-020
http://www.ucop.edu/acadadv/acadpers/apm/apm-020.pdf). However, the
University may share
the cost
of such projects with external sponsors in accordance with its principal
mission of supporting
the
search for and dissemination of knowledge when such cost sharing is required by
the sponsor as
described
below in this Chapter.
5-110
CONTRACTS AND GRANTS OFFICERS' GENERAL RESPONSIBILITY
The general
responsibility of Campus Contracts and Grants Officers with regard to cost
sharing is
to ensure that kinds and levels of cost sharing shown in
proposals and awards are:
(1) Approved by the stated campus source of the cost
sharing, i.e., the Department Chair or
Dean; and
(2) Consistent with University and sponsor policies and
available from appropriate sources.
5-200 CONTRIBUTION OF DIRECT
AND INDIRECT COSTS
5-210
CONTRIBUTION OF DIRECT COSTS
Direct costs may be contributed to a sponsored
project, subject to the cost sharing/matching conditions
and criteria discussed in Sections 5-300 through
5-420. If direct project costs are
contributed to a
sponsored project, indirect costs associated with the cost
sharing are calculated as part of the cost sharing
at the appropriate negotiated or approved indirect cost
rate.
5-220
CONTRIBUTION OF INDIRECT COSTS
Indirect costs may
be contributed to a sponsored project when associated with direct cost
contributions
(See 5-210). Waivers of indirect costs requested only for
the purpose of creating cost sharing will not
be approved.
However, indirect cost amounts that have been waived in accordance with
procedures
and on the bases outlined in Sections 8-600 through 8-660
of this Manual may be used to satisfy
sponsor cost sharing requirements.
5-300 TYPES OF COST SHARING/MATCHING
Mandatory cost sharing/matching
refers to that portion of the University contribution to a sponsored
project which is required by the terms of the project’s
Request for Proposal or Application (RFP/RFA).
By accepting an
award with mandatory cost sharing, the University incurs an obligation to
document its
financial contributions to the sponsored project. Reporting also may be required. Campus Contracts
and Grants Officers should carefully review all proposals
and awards to make sure that any cost sharing requirements
are consistent with agency and University policies and
appropriate for the value of the
project to the University.
Unless there is specific statutory requirements for cost sharing, federal
sponsoring agencies should
not require cost participation by educational
institutions engaged in federal research projects if:
(1) The
particular research objective or scope of the effort for the project is
specified by the federal
government rather than proposed by the institution. This would
apply to solicited proposals, but not
unsolicited proposals; or
(2) The research effort has only minor relevance
to the non-federal activities of the performing
institution and the institution is proposing to undertake the
research primarily as a service to the
government.
Awards from
for-profit sponsors should not require mandatory cost sharing. However, in cases
where this is appropriate, campus Contract and Grant
Officers should refer to sections 8-637 and
11-341 of this Manual for a summary of sponsor patent
rights applicable to agreements with for-profit
sponsors with regard to whether the for-profit sponsor has
paid the full cost of an extramurally
funded project.
Voluntary cost
sharing refers to University-initiated contributions to a sponsored
project. Voluntary
cost sharing is discouraged under the University’s policy
requiring full cost recovery for work
conducted under extramural awards as it commits University
resources and creates additional award
administration documentation requirements. However, if a campus anticipates voluntary
cost sharing
at the time of proposal submission, it is appropriate to
so inform the sponsor. If the proposed
cost
sharing amount is included in the award budget or the project
narrative, the fulfillment of the cost
sharing must be documented and reported as if it were
mandatory cost sharing. The extent of
voluntary
cost sharing should be reasonable and prudent, considering
the Principal Investigator's other
commitments of time and University policy regarding full recovery
of costs. As with mandatory
cost sharing, voluntary cost sharing must be approved by
individuals who have authority over the
stated source of the cost sharing.
All proposals for
federally supported research projects should be responsive to the applicable
federal
guidelines. However, any
attempt by sponsoring federal agencies to impose arbitrary or unreasonably
high cost contributions should be resisted. A voluntary contribution in excess of 5% may
be appropriate
if the contribution consists primarily of the academic
year salary of faculty members or when
equipment acquired by the institution for the project will be
of significant value to the University’s
research and educational activities.
5-330 COMMITTED COST SHARING/MATCHING
Committed cost
sharing includes mandatory and voluntary cost sharing identified in the project
proposal (in the proposed budget or in the project
narrative). It represents a commitment
by the
University that must
be fulfilled if the proposal is accepted as offered by the University and
awarded
by the sponsor
By accepting an
award with committed cost sharing, the University also incurs an obligation to
document the financial contribution provided to the sponsored
project. Reporting may also be
required by the sponsor.
(See 5-500, Cost Sharing Records and Reports.) In addition, information
on commitments must be identified for proper effort
reporting and for F&A rate proposal
development. (See section
5-530.)
Should the awarded
amount be reduced from the proposed amount, the committed cost sharing
may need to be adjusted accordingly, particularly if the
awarded budget reduction requires a
change in the Scope of Work.
Any reduced cost sharing should be correctly stated in the award.
5-340 VOLUNTARY UNCOMMITTED
COST SHARING
Voluntary
uncommitted cost sharing refers to any effort of University faculty (and
possibly senior
researchers) beyond
that which is committed and budgeted for in a sponsored agreement. Such
voluntary
uncommitted cost sharing is not included in either the proposal budget or the
narrative.
Unlike
committed cost sharing, voluntary uncommitted cost sharing does not require
documentation
or
reporting, and will not be included in the organized research base for
computing the facilities and
Administrative
(F&A) rate or reflected in allocation of F&A costs. Furthermore, such faculty and
senior
researchers’ effort is excluded from the effort reporting requirement in OMB
Circular
A-21, Cost Principles for Educational Institutions, section J.8.
[http://www.whitehouse.gov/omb/circulars/a021/a021.html]
M-01-06,
Clarification of OMB A-21 Treatment of
Voluntary Uncommitted Cost Sharing and
Tuition Remission Costs, http://www.whitehouse.gov/omb/memoranda/m01-06.html.)
5-400 ALLOWABILITY OF COSTS SHARED
Allowability
of cost sharing costs is usually determined by the specific award terms and
conditions.
When
a project is funded by a federal grant, University practice follows the
guidance on allowable
costs
given in OMB Circular A-110, ___.23 [http://www.whitehouse.gov/omb/circulars/a110/a110.html].
(See 5-F01).
According to this section, mandatory cost sharing/matching and in-kind
contributions
must be
verifiable, related to program objectives, allowable under the applicable cost
principles, not from
another
federal award (unless the terms of that award specifically permit the funds to
be used as cost
sharing
or matching), and shown in the approved budget.
The cost principles applicable to the University
are those
in OMB Circular No. A-21.
(See section 6-F01 of this Manual.) Funds from any source which
have
already been committed as cost sharing to another project cannot be committed
twice. In
addition,
income earned under the grant may not count as cost sharing unless expressly
authorized by
the
granting agency. (See section 6-F03 of
this Manual.)
The
University-funded salaries of faculty and other employees directly engaged in
the project, together
with related employee benefits and indirect costs,
constitute the most appropriate cost sharing contribution
to federal research projects. Sabbatical leave pay may be claimed if it is
identifiable with the project.
Particular care must
be taken to insure that University-furnished space or equipment is not claimed
as
a cost contribution since these costs are reimbursed by
application of the indirect cost rates.
Costs
financed by departmental budgets or any other non-federal fund source may be claimed as a cost sharing
contribution if they
during the performance period of the grant or contract. Departmental administrative expenses
(e.g., secretaries,
clerks, supplies) generally do not qualify as cost sharing since these expenses
normally benefit and are distributed across all activities and
objectives of a department and
are, therefore, included in the determination of the
indirect cost rate. In summary, costs
meeting
all of the above criteria are allowable as a University
cost sharing contribution under federal research
grants and contracts provided they:
(1)
qualify as allowable costs under provisions of OMB Circular No. A-21;
(2) do not duplicate the type
of costs included in the University's indirect cost rates; and,
(3)
have not been charged to any other federal contract or
grant.
In-kind
contributions represent the value of non-cash contributions provided by the
University or
non-federal third parties to a sponsored project when such
contributions directly benefit that project.
Such contributions
generally may be counted as cost sharing.
However, any property purchased with
federal funds may be contributed to a federally-sponsored
project only if authorized by federal legislation.
Typical examples of
in-kind contributions are services provided by volunteers and property donated
by
non-federal third parties.
University procedures on documenting in-kind contributions conform to
OMB Circular A-110,
___.23. (See 5-500 and
5-F01).
5-500 COST SHARING RECORDS AND
REPORTS
Accounting Manual Chapter A-000-7, “Official Documentation Required in
Support of University
Financial Transactions,” Section II. J., “Cost Participation on Sponsored Projects.”
[http://www.ucop.edu/ucophome/policies/acctman/a-000-7.html]
5-510
COST SHARING ON A PROJECT-BY-PROJECT BASIS
When cost sharing
contributions must be documented on a project-by-project basis, the Principal
Investigator’s
department is responsible for maintaining documentation to substantiate these
costs.
Each campus must
also have a centralized tracking system to capture committed cost sharing
amounts, including those stated in effort reports. Campus Accounting Offices may also require
copies of cost sharing documentation for audit
examination. Federal auditors may,
required Principal
Investigators to
provide supplementary information and records as practicable, to substantiate
the cost
sharing contributions certified with the award close-out.
All institutions
receiving subawards, subagreements
or subcontracts from the University must provide
information on their cost sharing contributions, if any, to the
University. As a prime award
institution, the University may not be required to obtain
documentation to substantiate all the cost
sharing stated by the subaward
institution, but must have a signed document from the subaward
institution stating the amount of the cost sharing provided. The subaward
institution is responsible
for maintaining the documentation of such costs should
auditors require it.
5-520 INSTITUTIONAL
COST SHARING
Certain federal
agencies may permit cost sharing requirements to be satisfied on an aggregate
basis, based on the average level of cost sharing for all
projects funded by that agency. Such
institutional cost sharing, when deemed appropriate, may be
satisfied on a campus- or
University-wide
basis. Statutory cost sharing requirements of the
National Science Foundation
are currently satisfied by each campus. Should University-wide cost sharing
requirements be
imposed in the future, specific procedures for collecting the
information necessary to substantiate
an average level of contributions would be implemented
as needed.
5-530
COST SHARING DATA
AND FACILITIES AND ADMINISTRATIVE RATE PROPOSALS
Detailed information
documenting the fulfillment of committed cost sharing, including information
on project and institutional cost sharing must be
incorporated into the campus’ facilities and
administrative (F&A) rate proposal. The information must be incorporated to
ensure that it is
included in the appropriate direct cost base in computing the
F&A rates.
5-999 RELATED UNIVERSITY REFERENCES
•
Accounting Manual Chapter A-000-7, Official Documentation Required in
Support of University
Financial Transactions
http://www.ucop.edu/ucophome/policies/acctman/a-000-7.html
EXTERNAL REQUIREMENTS--FEDERAL
5-F01 Section ___.23,
"Cost Sharing or Matching," of OMB Circular No. A-110, "Uniform
Administrative Requirements for Grants and Agreements
with Institutions of Higher
Education, Hospitals, and other Nonprofit Organizations."
http://www.whitehouse.gov/omb/circulars/a110/a110.html
PURPOSE
This section
provides guidance on the kinds of contributions that satisfy federal agency
cost-sharing
and matching requirements.
APPLICABILITY
The provisions of
Section ___.23 are applicable to all federal agencies in their administration
of grants
to, and cooperative agreements with, public and private
institutions of higher education, public
and private hospitals, and other quasi-public and private
nonprofit organizations.
SUMMARY OF PROVISIONS
a. General
This section provides
guidance on the allowability of cost sharing costs
under Federal grants and other
assistance agreements. It also establishes criteria for the
evaluation of in-kind contributions made by
third parties. This
section does not mandate cost sharing; statutory requirements for cost sharing
(if
any) are generally contained in the annual Appropriation Bills for each federal
agency.
Agency-specific
requirements should be clearly stated in agency RFPs
or RFAs.
b.
Definitions
Cost sharing and
matching amounts are that portion of project or program costs not reimbursed
by the federal government. Contributions are generally in the form of
actual disbursements
(cash
contributions), non-cash contributions provided by the institution from
non-federal sources, or
third party in-kind contributions. Property purchased with federal funds may not
be included under
the definition of in-kind contributions unless authorized
by federal legislation.
EXTERNAL REQUIREMENTS--FEDERAL
c. Criteria for Allowability
Mandatory cost
sharing and in-kind contributions must be verifiable, related to program
objectives, allowable under the applicable cost principles, not
from another federal award, unless
the terms of that award specifically permit the funds to
be used as cost sharing or matching, and
shown in the approved budget. The cost principles applicable to the
University are those in OMB
Circular No. A-21. (See Section 6-F01 of this Manual).
d.
Valuation of In-Kind Contributions
In-kind contributions
will be evaluated in accordance with the applicable cost principles. In the
case of the University, the applicable cost principles are
found in OMB Circular A-21. (See
section 6-F01 of this Manual.)
Generally, according to OMB Circular A-21, the valuation of
a donated service or item is to be done in a manner
that is reasonable and equitable.
Specific guidelines
on the valuation of in-kind contributions from non-federal third parties are
organized according to three main categories: volunteer services, expendable personal property, and
equipment/buildings/land.
similar work in the recipient's organization. Expendable personal
property (e.g. supplies)
should
be rated at current market value. Equipment/buildings/land should be appraised
at their current market
or, as appropriate, rental value. (In certain cases, the services of an
independent market appraiser are
required.) The full
value of volunteer services and expendable personal property may be used to
calculate the amount of an in-kind contribution. For equipment/buildings/land, however, the
full value
may be used only if the purpose of the sponsoring grant
or agreement is to assist the institution in
acquiring the property.
Otherwise, only depreciation or use charges may be counted.
e.
Documentation of Mandatory Cost Sharing
Volunteer
services must be documented and, to the extent feasible, supported by the same
methods
used by
the institution for its employees. The
basis for determining the valuation for personal
services,
material, equipment, buildings, and land also must be documented.
EXTERNAL REQUIREMENTS--FEDERAL
TEXT
The following is the complete
text of A-110, Section ___.23:
___.23 Cost sharing or
matching.
(a) All contributions,
including cash and third party in-kind, shall be accepted as part of the
recipient's cost
sharing or matching when such contributions meet all of the
following criteria.
(1) Are verifiable from the recipient's
records.
(2) Are not included as contributions for any other
federally-assisted project or program.
(3) Are necessary
and reasonable for proper and efficient accomplishment of project or program
objectives.
(4) Are allowable
under the applicable cost principles.
(5) Are not
paid by the Federal Government under another award, except where authorized by
Federal statute
to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by the Federal
awarding agency.
(7) Conform to other provisions of this
Circular, as applicable.
(b) Unrecovered
indirect costs may be included as part of cost sharing or matching only with
the prior approval
of the Federal awarding agency.
(c) Values for recipient
contributions of services and property shall be established in accordance with
the applicable
cost principles. If a Federal awarding agency authorizes recipients to donate buildings or land for construction/facilities
acquisition
lesser of (1) or (2).
(1) The certified value of the remaining
life of the property recorded in the recipient's accounting records at the
time of donation.
(2) The current fair market value.
However, when there is sufficient justification, the Federal awarding agency
may approve the use of the current fair market value of
the donated property, even if it exceeds the certified value
at the time of donation to the project.
EXTERNAL REQUIREMENTS--FEDERAL
(d) Volunteer services
furnished by professional and technical personnel, consultants, and other
skilled and
unskilled labor may be counted as cost sharing or matching if
the service is an integral and necessary part of
an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar
work in the recipient's organization. In those instances in which the required
skills are not found in the
recipient organization, rates shall be consistent with those
paid for similar work in the labor market in which
the recipient competes for the kind of services involved.
In either case, paid fringe benefits that are
reasonable, allowable, and allocable may be included in the
valuation.
(e) When an employer other
than the recipient furnishes the services of an employee, these services shall
be valued at the employee's regular rate of pay (plus an
amount of fringe benefits that are reasonable,
allowable, and allocable, but exclusive of overhead costs),
provided these services are in the same skill for
which the employee is normally paid.
(f) Donated supplies may
include such items as expendable equipment, office supplies, laboratory
supplies or
workshop and classroom supplies. Value assessed to donated
supplies included in the cost sharing or matching
share shall be reasonable and shall not exceed the fair
market value of the property at the time of the donation.
(g) The method used for
determining cost sharing or matching for donated equipment, buildings and land
for
which title passes to the recipient may differ according to
the purpose of the award, if (1) or (2) apply.
(1) If the
purpose of the award is to assist the recipient in the acquisition of
equipment, buildings or land, the
total value of the donated property may be claimed as cost
sharing or matching.
(2) If the
purpose of the award is to support activities that require the use of
equipment, buildings or land,
normally only depreciation or use charges for equipment and
buildings may be made. However, the full
value
of equipment or other capital assets and fair rental
charges for land may be allowed, provided that the Federal
awarding agency has approved the charges.
(h) The value of donated
property shall be determined in accordance with the usual accounting policies
of the
recipient, with the following qualifications.
EXTERNAL REQUIREMENTS--FEDERAL
(1) The value of donated land and
buildings shall not exceed its fair market value at the time of donation
to the recipient as established by an independent
appraiser (e.g., certified real property appraiser or General
Services Administration representative) and certified
by a responsible official of the recipient.
(2) The
value of donated equipment shall not exceed the fair market value of equipment
of the same age
and condition at the time of donation.
(3) The
value of donated space shall not exceed the fair rental value of comparable
space as established
by an independent appraisal of comparable space and
facilities in a privately- owned building in the same locality.
(4) The value of loaned equipment shall
not exceed its fair rental value.
(5) The
following requirements pertain to the recipient's supporting records for
in-kind contributions from
third parties.
(i)
Volunteer
services shall be documented and, to the extent feasible, supported by the same
methods
used by
the recipient for its own employees.
(ii)
The basis for
determining the valuation for personal service, material, equipment, buildings
and land
shall be
documented.
PRIMARY UNIVERSITY RESPONSIBILITY
Principal
Investigators and unit business offices are responsible for insuring that the
University's cost
sharing
commitment is fulfilled, for providing the required
information
for the cost sharing contribution report, and for maintaining information and
records that
support
cost sharing certifications.
Campus
Accounting Officers, department heads, and other appropriate campus or Office
of the
President
administrative offices are responsible for making sure that allowable
contributions are
evaluated
and documented in accordance with the provisions of this section, when the terms
of a
federal
award mandate cost sharing or matching.
UNIVERSITY IMPLEMENTATION
The
cost sharing documentation requirements of this section are implemented in Accounting Manual
Chapter
A-000-7, “Official Documentation Required in Support of University Financial
Transactions.” [http://www.ucop.edu/ucophome/policies/acctman/a-000-7.html]
EXTERNAL REQUIREMENTS--FEDERAL
Campus
Accounting Offices are responsible for mechanisms to identify and maintain
documentation
of
committed cost sharing which ensure that:
1) proper effort reporting is accurately captured;
2) cost sharing commitments are fulfilled; and 3) the total
annual value of cost sharing delivered is
reported
and used in the preparation of the campus F&A rate proposal.