1. DCA1 F&A Proposal Requirements -Beyond the Standard Format- Department of Health & Human Services Division of Cost Allocation

2. DCA2 Importance of Proposal Support: Substantiate educational institutions claim for the reimbursement of F&A costs Serve as a basis for negotiating fair and reasonable indirect cost rates Demonstrate that costs are consistently treated and are reasonable, allocable, and allowable in accordance with 2 CFR Part 220 (OMB Circular A- 21)

3. DCA3 Importance of Proposal Support: Evaluate the adequacy of the institution’s reconciliation of the proposal to the audited financial statements Provide a basis for understanding how an educational institution assigns space for functional activities (organized research, instruction, other sponsored activities, and other institutional activities) through a space survey

4. DCA4 Importance of Proposal Support: Allow for an adequate evaluation of the O&M, Depreciation, Interest, Administration and Library cost pools Allow for an analysis of the direct cost base and verification of the accuracy of costs assigned to each major function of the institution

5. DCA5 Average Timing of Review and Negotiation Review of Proposal - six to twelve months depending on the circumstances Actual Negotiation - completed in one or more day(s) depending on the circumstances

6. DCA6 Need for Site Visit To review/verify/evaluate the allocation of space To analyze specialized service facilities and recharge centers as well as unique research programs or projects such as primate centers To cover areas of the proposal which are unclear that may require additional documentation or explanations To review new construction and major remodeling projects

7. DCA7 Reconciliation of F&A Proposal to the Audited F/S Essential to proposal preparation Essential to proposal preparation Must reconcile each F&A cost pool and each direct cost function Must reconcile each F&A cost pool and each direct cost function Each exclusion and transfer should be well detailed and explained Each exclusion and transfer should be well detailed and explained Reconciliation should begin with audited F/S and flow through to the F&A proposal step-down schedule Reconciliation should begin with audited F/S and flow through to the F&A proposal step-down schedule

8. DCA8 Reconciliation of F&A Proposal to the Audited F/S Research reconciliation should detail each exclusion (subcontracts, equipment, etc.) Research reconciliation should detail each exclusion (subcontracts, equipment, etc.) Clearly show the treatment of research training, stipends and tuition remission Clearly show the treatment of research training, stipends and tuition remission Clearly show the reclassification for cost sharing Clearly show the reclassification for cost sharing State schools need to submit applicable central admin cost distribution schedules State schools need to submit applicable central admin cost distribution schedules

9. DCA9 SPACE Space is referred to as “The Final Frontier”, a mystery with much left to be discovered However, for F&A rate purposes space should be well explored and examined as an on-going process. Facility space should be well understood and sufficiently supported with little left to be discovered

10. DCA10 SPACE SUPPORT The default method in Circular A-21 for allocating operations and maintenance (O&M), building and equipment depreciation, and interest costs is: Employee full-time equivalents (FTE) (or) Employee salaries & wages

11. DCA11 SPACE SUPPORT If not allocating costs by institutional wide or departmental S&W or FTE then: Allocation of space is the basis behind the allocation of operations and maintenance (O&M), building and equipment depreciation, and interest costs In this case, the classification of space is potentially the most vital aspect of the F&A cost rate proposal

12. DCA12 SPACE SUPPORT Each room that has a percentage of space classified as research must identify all users of the room (funded and unfunded) and identify the supporting sponsored and non-sponsored accounts in support of the space Key concern: For each room, the treatment of the supporting accounts in the F&A cost proposal should match the classification of that room’s functional space

13. DCA13 SPACE SUPPORT Common DCA space support requests: Square footage breakdown by room and by function showing the room description and the principal investigator assigned to the room For rooms being reviewed by DCA, a schedule for each room that lists the users of the room with their job titles and the account or accounts that support each user Also for rooms being reviewed by DCA, a list of the unfunded users of the room (students, visiting scientists, etc.) and their average time spent in the room (weekly hours, number of months)

14. DCA14 SPACE SUPPORT Some guidelines DCA uses to choose the space to review: Research intensive departments in high cost buildings Departments with a significantly higher percentage of space classified as research relative to the percentage of that department’s MTDC dollars included in the research base Rooms classified as 90 to 100% research

15. DCA15 SPACE SUPPORT Common DCA interview questions: Who uses the rooms and what are their funding sources? Do any unfunded students use the rooms? Do any visiting scientists without funding or with their own funding use the rooms? Has there been or will there be any significant changes to the use of the space since the base year?

16. DCA16 SPACE SUPPORT Common DCA space adjustments: Improper matching of the space classification to the treatment of the supporting accounts Space for unfunded users (students, visiting scientists, etc.) has not been identified and classified as IDR or OIA Space for users supported by research training, stipends and tuition remission is classified as research while the amounts are not included in the research base

17. DCA17 SPACE SUPPORT Common DCA space adjustments: OIA functions in labs not recognized such as directly funded Howard Hughes Institute researchers or other outside users IDR or OIA supported users identified as using only one lab assigned to a PI when they actually use all the labs assigned to that PI PI offices not having space classified for the PI’s teaching and administrative activities

18. DCA18 SPACE SUPPORT Common DCA space adjustments: Vacant space and/or excessive space Space classified as research that should be treated as a Specialized Service Facility (SSF)

19. DCA19 How to Reduce Effort on Space Use the default method in Circular A-21 for allocating space related costs Use the Alternate Space Methodology provided by DCA in the DCA Best Practices Manual for Reviewing College and University Long-Form F&A Cost Rate Proposals

20. DCA20 Specialized Service Facilities A specialized service center or facility (SSF) is a service center that provides highly complex or specialized facilities operated by the institution Categorizing a service center as an SSF is necessary to assure that the full costs are assigned to the actual users rather than spread to awards that do not benefit from the service center The SSF billing rates should be designed to recover the aggregate costs of providing the service and shall include both direct and an allocable portion of F&A costs. F&A costs should be included in the appropriate billing rates

21. DCA21 Specialized Service Facilities There is no requirement to fully load rates of service centers that do not meet the definition of a Specialized Service Facility such as recharge centers If the institution chooses not to include facility costs in the SSF billing rates then the applicable facility costs must be assigned to OIA

22. DCA22 Determining if a Center is a Specialized Service Facility Materiality and the significance of the charges to Federal awards are the main criteria. If the charges are significant, categorizing a service center as an SSF is necessary to assure that the full costs are assigned to the actual users rather than spread to non-users The university should have a written policy describing the guidelines used to identify a specialized service facility from a recharge center. Many institutions use a dollar threshold. For example, service centers with annual budgets exceeding $1,000,000 may be considered specialized service facilities

23. DCA23 Determining if a Center is a Specialized Service Facility Next the nature of the services being provided should be considered. For example a large copy center is usually not considered a specialized service center because it is not highly complex. But a specialized electron microscope facility may be considered as a specialized service center even if below the dollar threshold because it is highly complex and only some Federal awards may benefit from this service center while many other Federal awards do not

24. DCA24 Cost Sharing/Effort Reporting Cost sharing needs to be identified and quantified so the costs are properly included in the research base for developing the F&A rate Cost sharing needs to be identified and quantified so the costs are properly included in the research base for developing the F&A rate Costs should follow the project or activity, not the funding source. For example, a PI who commits 50% of their salary as effort to a Federal research project while only requesting 25% salary reimbursement has committed to cost sharing. The cost shared amount (25%), even if funded through an unrestricted institutional account, must be included as a cost of the sponsored research project and be included in the research base for developing the F&A rate Costs should follow the project or activity, not the funding source. For example, a PI who commits 50% of their salary as effort to a Federal research project while only requesting 25% salary reimbursement has committed to cost sharing. The cost shared amount (25%), even if funded through an unrestricted institutional account, must be included as a cost of the sponsored research project and be included in the research base for developing the F&A rate

25. DCA25 Cost Sharing/Effort Reporting The DS-2 should describe the policies and procedures related to effort reporting and to identifying cost sharing The DS-2 should describe the policies and procedures related to effort reporting and to identifying cost sharing A copy of the instructions for effort reporting and identifying cost sharing should either be included in the F&A rate cost proposal or referenced to the DS-2 in the F&A rate cost proposal A copy of the instructions for effort reporting and identifying cost sharing should either be included in the F&A rate cost proposal or referenced to the DS-2 in the F&A rate cost proposal

26. DCA26 Cost Sharing/Effort Reporting Mandatory cost sharing – mandatory cost sharing is required by the sponsor as a condition of obtaining an award. When an award is received that requires mandatory cost sharing, that cost sharing becomes an institutional commitment. All mandatory cost sharing must be documented and included in the research base for the F&A rate proposal Mandatory cost sharing – mandatory cost sharing is required by the sponsor as a condition of obtaining an award. When an award is received that requires mandatory cost sharing, that cost sharing becomes an institutional commitment. All mandatory cost sharing must be documented and included in the research base for the F&A rate proposal

27. DCA27 Cost Sharing/Effort Reporting Voluntary committed cost sharing - voluntary committed cost sharing represents a commitment made to a sponsored project either through the budget or through the narrative description. If an award made to an institution contains voluntary committed cost sharing, the institution is responsible for documenting that cost shared commitment and including it in the research base for the F&A rate proposal Voluntary committed cost sharing - voluntary committed cost sharing represents a commitment made to a sponsored project either through the budget or through the narrative description. If an award made to an institution contains voluntary committed cost sharing, the institution is responsible for documenting that cost shared commitment and including it in the research base for the F&A rate proposal

28. DCA28 Cost Sharing/Effort Reporting Voluntary uncommitted cost sharing - voluntary uncommitted cost sharing (VUCS) is restricted to only university faculty (including senior researchers) effort that is over and above that which is committed and budgeted for in a particular project. VUCS excludes effort devoted to a project that was originally committed by the faculty, including senior researchers, or is a result of a shift in workload. VUCS does not need to be included in the research base or be reflected in any allocation of F&A costs Voluntary uncommitted cost sharing - voluntary uncommitted cost sharing (VUCS) is restricted to only university faculty (including senior researchers) effort that is over and above that which is committed and budgeted for in a particular project. VUCS excludes effort devoted to a project that was originally committed by the faculty, including senior researchers, or is a result of a shift in workload. VUCS does not need to be included in the research base or be reflected in any allocation of F&A costs

29. DCA29 Equipment Equipment Inventory Listings by: Building & Department Name Room Number Inventory Tag Number Equipment Description & Manufacturer Year Acquired & Useful Life Total Cost & Annual Depreciation Funding Source (Federal, Non-Federal, University, State, Foundation)

30. DCA30 Matching Funds on Equipment and Buildings From research awards, Federally required matching funds for the acquisition of equipment must be excluded from the equipment depreciation pool Otherwise, it is a CAS 502 violation due to inconsistent costing

31. DCA31 Matching Funds on Equipment and Buildings Federally required matching funds for buildings or equipment on construction awards may be depreciated unless specifically prohibited in the award Instrumentation awards will be evaluated on a case-by-case basis

32. DCA32 Building Depreciation Specific review steps will be performed by the DCA to ensure that depreciation or use allowances on buildings have been computed properly If a building componentization study was used to compute building depreciation, tests are performed to ensure that component useful lives are reasonable and consistent with actual experience at that institution

33. DCA33 Building Depreciation The DCA will also determine that any change from use allowance to depreciation was performed in accordance with OMB Circular A-21 provisions OMB has restricted our ability to question the useful lives of buildings where the depreciation is recorded on the financial statements, therefore, there’s not much we can do with the pool

34. DCA34 Building Depreciation A negotiator should pick a few predominately research buildings and verify that the same percentage of depreciation has been allocated to research as space was allocated to research for that building. For example, let’s say “building A” has a total of 10,000 square feet and 3,000 square feet has been allocated to research (30%). If “building A” has $100,000 of depreciation costs we need to verify that only $30,000 of depreciation is allocated to research for the building

35. DCA35 Building Depreciation The reason why the above mentioned step is important is because sometimes the Universities will not allocate depreciation associated with space occupied by administrative functions (e.g., GA, DA, SPA). This results in the allocation of depreciation to research to be overstated

36. DCA36 Building Depreciation Allocated by Room or Project Building Depreciation, whether for building costs, renovations or alterations, is unacceptable when allocated at a finer level than by building square footage CAS 502 violation due to inconsistent costing

37. DCA37 Building Depreciation Allocated by Room or Project A-21 intended that building depreciation be allocated at the building level and not at a finer level A-21 does not specifically refer to renovations and alterations which sustains allocating these costs at the building level Rescinding this policy would require OMB approval which would also need to likely be “revenue neutral”

38. DCA38 Operation & Maintenance Detailed breakdown of O&M expenses within subpools –Department paid O&M –Utilities –Repairs and alterations (capitalization policy) –Hazardous waste and environmental safety –Security, custodial, etc.

39. DCA39 Operation & Maintenance Allocation statistics for each subpool –Space data –Justification for other than space data

40. DCA40 Interest Reconciliation to Financial Statements SWCAP – General Obligation Bonds Financing Agreement Loan and Interest Payment Schedule Support for Interest by Building

41. DCA41 Administrative Cost Pools General Administration –Support for screening and exclusion of unallowable costs and activities –Listing and costs of functions and activities Departmental Administration –Screening of Deans’ Office expenses –Details supporting the calculation and application of the DCE Sponsored Projects Administration –Listing and costs of functions and activities Student Services

42. DCA42 LIBRARY EXPENSES Library expenses shall be allocated to institutional functions on the basis of primary users of the library services, including students, professional employees and other users Library expenses shall be allocated to institutional functions on the basis of primary users of the library services, including students, professional employees and other users The library expenses are allocated on a full-time equivalent (FTE) basis. The university should provide the schedules used to support the full- time equivalent and a brief explanation of the methodology used to compute the FTE The library expenses are allocated on a full-time equivalent (FTE) basis. The university should provide the schedules used to support the full- time equivalent and a brief explanation of the methodology used to compute the FTE

43. DCA43 LIBRARY EXPENSES The cost allocated to the student category is assigned to instruction. Students include all individuals enrolled as students regardless of whether they do or do not earn credits towards a degree or certificate The cost allocated to the student category is assigned to instruction. Students include all individuals enrolled as students regardless of whether they do or do not earn credits towards a degree or certificate The cost allocated to the professional employee category is assigned to the major function of the institution in proportion to the salaries and wages of faculty and professional employees The cost allocated to the professional employee category is assigned to the major function of the institution in proportion to the salaries and wages of faculty and professional employees The cost allocated to other users is assigned to other institution activities. This category includes the general public The cost allocated to other users is assigned to other institution activities. This category includes the general public

44. DCA44 LIBRARY EXPENSES The library environment has changed considerably in recent years due to the increasing use of computer-based library functions, such as the internet. In some institutions the library function has been commingled with the data processing functions of the institution. Therefore, increase in use of the internet to access library resources by outside users may require additional analysis in estimating the portion of the library expenditures which are allocable to OIA The library environment has changed considerably in recent years due to the increasing use of computer-based library functions, such as the internet. In some institutions the library function has been commingled with the data processing functions of the institution. Therefore, increase in use of the internet to access library resources by outside users may require additional analysis in estimating the portion of the library expenditures which are allocable to OIA

45. DCA45 LIBRARY EXPENSES Certain items should be directly assigned to instruction, such as audio-visual learning center costs; rare book purchases should be excluded Certain items should be directly assigned to instruction, such as audio-visual learning center costs; rare book purchases should be excluded Sometimes universities have affiliate schools and they are reimbursed for library usage. This should be checked Sometimes universities have affiliate schools and they are reimbursed for library usage. This should be checked

46. DCA46 SPECIAL LIBRARY COST STUDIES Section E.2.d.(3) of the Circular allows cost analysis studies to measure the use of the library services, if the studies are unbiased and statistically valid The institution is required to submit a copy of the cost study, including the study methodology, survey forms, statistical sampling plan, statistical projection and supporting work papers