NOAA GRANT MANAGEMENT DIVISION BROWN BAG SEMINAR COST ANALYSIS Presented by: BTOP Project Director William Ball Grant Management Specialist Donald Gooding March 27, 2014

WHAT IS COST ANALYSIS? Cost analysis is the review and evaluation of the applicant’s proposed budget and judgmental factors applied in projecting the estimated costs. Grant Management Specialist will determine if cost are allocable, allowable, reasonable, and necessary.

PURPOSE OF COST ANALYSIS The basic purpose for cost analysis in a financial assistance award is to provide a reasonable and justifiable analysis on the cost for the services which are being provided by the specific award.

DEFINITIONS Reasonable Cost – ordinary and necessary for the operation of the organization or performance of the award. Allocable Cost – benefits both the award and other work and can be distributed in reasonable proportion to the benefits received. Allowable Cost –ensure cost are reasonable; conform to limitations or exclusions in the award; consistent with organizations policies and practices; treated consistently throughout the organization; and be adequately documented. Necessary – cost must be prudent to complete the objectives of the project

DEFINITIONS (CONTINUED) Direct Cost – Identified specifically with a particular cost objective; an instructional activity; or other direct activity of an organization. Indirect Cost – Costs that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective. Cost Share or Matching – Cost sharing or matching is the portion of project cost not paid by federal funds (unless authorized by statute).

DEFINITIONS (CONTINUED) Equipment – Tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. (Examples, boats, cars, mainframe computers) Supplies – Tangible, expendable, personal property having a useful life of less than one year. (Examples, pencils, paper, pens, toner cartridges, etc.)

APPLICATION PACKAGE FOR FULL REVIEW OF COST ANALYSIS ITEMS REQUIRED FROM THE RECIPIENT: 1.*SF-424, "Application for Federal Assistance" 2.*SF-424A, "Budget Information - Non-Construction Programs" 3*SF-424B, " Assurances - Non-Construction Programs (if applicale) 4.*SF-424C, "Budget Information - Construction Programs" (if applicable) " or *SF-424D, "Assurances - Construction Programs" (if applicable) 5. *Project Description - identifies objectives, jobs, tasks, milestones, degree of Federal Involvement, contributions/donations, personnel vitae, equipment purchases (or leasing), subcontracting (including justification if non-competitive), and a detailed description of foreign travel. 6. *Budget Narrative – a detailed description on how federal funds will be used for each class category as shown on the SF424A. The same level of detail should apply to cost share/matching (if applicable). 7.CD-511, "Certifications Regarding Lobbying; Debarment, Suspension and Other Responsibility Matters; and Drug Free Workplace Requirements and Lobbying" 8.SF-LLL, "Disclosure of Lobbying Activities" (Blocks 1 – 11 must be filled in if applicable) ***NOTE: While a copy of a current approved Negotiated Indirect Cost Rate Agreement is NOT required, if supplied, it will help to expedite the review of the application.

COST ANALYSIS PROJECT DESCRIPTION AND BUDGET MUST MIRROR ONE ANOTHER. BUDGET (SF424A MUST MIRROR THE BUDGET NARRATIVE)

PERSONNEL To determine if personnel cost are reasonable the applicant must provide the following: Name and position of individuals; RESUME Time commitments such as hours and percent of time stated for each position Total charges for each person listed along with an explanation of how the costs were calculated Combined time for all activities of any individual do not exceed 100% of their time Reasonable time commitments and charges Costs charged to salaries exclude indirect cost category for Executive personnel Individuals are employees of the applicant organization. (If not, an explain is provided) Cost of living increase built into the budget Justified salary increases for the grant period

FRINGE BENEFITS FRINGE BENEFITS: The budget narrative must provide a description and breakdown of the benefits received by personnel when rates are higher than 35%. Fringe benefits may include the following: Vacation Holiday Health insurance Life insurance Tuition reimbursement **CANNOT BE CHARGED AS DIRECT AND INDIRECT COSTS**

TRAVEL TRAVEL: The budget narrative must provide a detailed breakdown of travel cost: For foreign, domestic and local travel: - trip destinations, estimated mileage (local travel), method of travel - cost per mile and duration. -number of travelers, per diem rate for meals and lodging? If actual trips details are unknown, what is the basis for the proposed charges. Is the requested travel directly relevant to the successful completion of the project? **COMPLY WITH FLY AMERICA ACT**

CONTRACTUAL CONTRACTUAL: The budget narrative should include: Separate budgets and justification for all subcontracts Are any sole source contracts contemplated? Are the products/services to be acquired described along with the applicability of each to the project? Recipients responsible for assurances and must cite specific policies, procedures, regulations, or standards as being in compliance with requirements: Bonds as bid, performance, payment, advance payment, infringement and fidelity bonds for employees and officials. Federal Funding Accountability and Transparency Act (FFATA) is required by recipient for subcontract greater than $25,000. **NEVER EXECUTE A “STRAW GRANT”.

CONSTRUCTION CONSTRUCTION: The building of a large structure. The budget narrative should address the following: Is the construction/renovation authorized for this program? Is the construction/renovation described? Is the method described which was used to calculate costs? Are the proposed costs presented in sufficient detail? Should include the following: a. A listing of work to be performed b. Cost detail by task or work order contemplated (included should be cost per square foot, cost of material, etc.) c. Is the work being done by the applicant or outside contractors? 5.Is there a need for the type of work/costs being proposed? 6.Is the basis for the estimates of cost present? (Is there documentation to support cost estimates?) 7.Are the costs justified, reasonable, allowable, and realistic? Verify costs proposed to quotes received.

SUPPLIES/EQUIPMENT AND OTHER SUPPLIES: Make sure supplies/equipment and other are itemized and relevant Are the charges reasonable? If over $5,000 is there a description of how it will be used in the project? For equipment has a lease versus purchase analysis been completed? For each item of equipment, is the number of units, cost per unit and total cost specified? Are items listed by type of material or nature of expense? For each charge, is the number of units, cost per unit and total cost specified? Are disallowed costs (e.g. liquor, entertainment) excluded? **SOME GRANTEES FOLLOW THEIR OWN POLICIES AND PROCEDURES IN DEFINING EQUIPMENT, I.E, $500 VALUE**

INDIRECT COSTS INDIRECT COSTS: The budget narrative should provide the rate in which the indirect charge will be applied. Cognizant agency – federal agency responsible for reviewing, negotiating, and approving cost allocation plan. The Negotiated Indirect Cost Rate Agreement (NICRA) is applied to: 1. All Direct Costs 2. Modified Base

COST PRINCIPLES OMB Circular A-21, 2 CFR 220 – Cost Principles for Educational Institutions OMB Circular A-87, 2 CFR 225 – Cost Principles for State, Local, and Indian Tribal Governments OMB Circular A-122, 2 CFR 230– Cost Principles for Non-Profit Organizations OMB Circular A-133 – Audit of States, Local Governments, and Non- Profit Organizations Federal Acquisition Regulation Part 31 – Cost Principles for Profit Making Organizations

UNIFORM ADMINISTRATIVE REQUIREMENTS 15 CFR Part 14 – Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations 15 CFR Part 24 – Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments **NOTE: Council on Financial Assistance Reform (COFAR) 2 CFR Chapter 1, Chapter II, Part 200,et al, goes into effect 12/27/2014 Audits Effective January 2015

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