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vices or benefits received, and (4) the expenditure is not for membership in an organization which devotes a substantial part of its activities to influencing legislation.

(b) Reference Material. The cost of books and subscriptions to civic, business, professional, and technical periodicals is allowable when related to the grant program.

(c) Meetings and Conferences. Costs are allowable when the primary purpose of the meeting is the dissemination of technical information relating to the grant program and they are consistent with regular practices followed for other activities of the grantee.

15-711.20 Motor Pools. The costs of a service organization which provides automobiles to user grantee agencies at a mileage or fixed rate and/or provides vehicle maintenance, inspection and repair services are allowable.

15-711.21 Payroll Preparation. The cost of preparing payrolls and maintaining necessary related wage records is allowable.

15-711.22 Personnel Administration. Costs for the recruitment, examination, certification, classification, training, establishment of pay standards, and related activities for grant programs are allowable.

15-711.23 Printing and Reproduction. Cost for printing and reproduction services necessary for grant administration, including but not limited to forms, reports, manuals, and informational literature, are allowable. Publication costs of reports or other media relating to grant program accomplishments or results are allowable when provided for in the grant agreement.

15-711.24 Procurement Service. The cost of procurement service, including solicitation of bids, preparation and award of contracts, and all phases of contract administration in providing goods, facilities and services for grant programs, is allowable.

15-711.25 Taxes. In general, taxes or payments in lieu of taxes which the grantee agency is legally required to pay are allowable.

15-711.26 Training and Education. The cost of in-service training, customarily provided for employee development which directly or indirectly benefits grant programs is allowable. Out-of-Service training involving extended periods of time is allowable only when specifically authorized by the grantor agency.

15-711.27 Transportation. Costs incurred for freight, cartage, express, postage and other transportation costs relating either to goods purchased, delivered, or moved from one location to another are allowable.

15-711.28 Travel. Travel costs are allowable for expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business incident to a grant program. Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip, and results in charges consistent with those normally allowed in like circumstances in nonfederally sponsored activities. The difference in cost between firstclass air accommodations and less-than-first-class air accommodations is unallowable except when less-than-first-class air accommodations are not reasonably available.




15-712 Costs Allowable With Approval of Grantor Agency.

15-712.1 Automatic Data Processing. The cost of data processing services to grant programs is allowable. This cost may include rental of equipment or depreciation on grantee-owned equipment. The acquisition of equipment, whether by outright purchase, rental-purchase agreement or other method of purchase, is allowable only when specific prior approval of the grantor Federal agency is provided under the selected item for capital expenditures.

15-712.2 Building Space and Related Facilities. The cost of space in privately or publicly owned buildings used for the benefit of the grant program is allowable subject to the conditions stated below. The total cost of space, whether in a privately or publicly owned building, may not exceed the rental cost of comparable space and facilities in a privately owned building in the same locality. The cost of space procured for grant program usage may not be charged to the program for periods of nonoccupancy, without authorization of the grantor Federal agency.

(a) Rental Cost. The rental cost of space in a privately owned building is allowable.

(b) Maintenance and Operation. The cost of utilities, insurance, security, janitorial services, elevator service, upkeep of grounds, normal repairs and alterations and the like, are allowable to the extent they are not otherwise included in rental or other charges for space.

(c) Rearrangements and Alterations. Cost incurred for rearrangement and alteration of facilities required specifically for the grant program or those that materially increase the value of useful life of the facilities (15-712.3) are allowable when specifically approved by the grantor agency.

(d) Depreciation and Use Allowances on Publicly Owned Buildings. These costs are allowable as provided in 15-711.11.

(e) Occupancy of Space under Rental-Purchase or a Lease with Option-toPurchase Agreement. The cost of space procured under such arrangements is allowable when specifically approved by the Federal grantor agency.

15-712.3 Capital Expenditures. The cost of facilities, equipment, other capital assets, and repairs which materially increase the value or useful life of capital assets is allowable when such procurement is specifically approved by the Federal grantor agency. When assets acquired with Federal grant funds are (a) sold, (b) no longer available for use in a federally sponsored program, or (c) used for purposes not authorized by the grantor agency, the Federal grantor agency's equity in the asset will be refunded in the same proportion as Federal participation in its cost. In case any assets are traded on new items, only the net cost of the newly acquired assets is allowable.

15-712.4 Insurance and Indemnification.

(a) Costs of insurance required, or approved and maintained pursuant to the grant agreement, are allowable.

(b) Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations:

(1) Types and extent and cost of coverage will be in accordance with

general State or local government policy and sound business practice.

(2) Costs of insurance or of contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to




the extent that the grantor agency has specifically required or approved such


(c) Contributions to a reserve for a self-insurance program approved by the Federal grantor agency are allowable to the extent that the type of coverage, extent of coverage, and the rates and premiums would have been allowed had insurance been purchased to cover the risks.

(d) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or otherwise) are unallowable unless expressly provided for in the grant agreement. However, costs incurred because of losses not covered under nominal deductible insurance coverage provided in keeping with sound management practice, and minor losses not covered by insurance, such as spoilage, breakage, and disappearance of small hand tools which occur in the ordinary course of operations, are allowable.

(e) Indemnification includes securing the grantee against liabilities to third persons and other losses not compensated by insurance or otherwise. The Government is obligated to indemnify the grantee only to the extent expressly provided for in the grant agreement, except as provided in (d) above.

15-712.5 Management Studies. The cost of management studies to improve the effectiveness and efficiency of grant management for on-going programs is allowable except that the cost of studies performed by agencies other than the grantee department or outside consultants is allowable only when authorized by the Federal grantor agency.

15-712.6 Preagreement Costs. Costs incurred prior to the effective date of the grant or contract, whether or not they would have been allowable thereunder if incurred after such date, are allowable when specifically provided for in the grant agreement.

15-712.7 Professional Services. Cost of professional services rendered by individuals or organizations not a part of the grantee department is allowable subject to such prior authorization as may be required by the Federal grantor agency. 15-712.8 Proposal Costs. Costs of preparing proposals on potential Federal Government grant agreements are allowable when specifically provided for in the grant agreement.

15-713 Unallowable Costs.

15-713.1 Bad Debts. Any losses arising from uncollectible accounts and other claims, and related costs, are unallowable.

15-713.2 Contingencies. Contributions to a contingency reserve or any similar provision for unforeseen events are unallowable.

15-713.3 Contributions and Donations. Unallowable.

15-713.4 Entertainment. Costs of amusements, social activities, and incidental costs relating thereto, such as meals, beverages, lodgings, rentals, transportation, and gratuities, are unallowable.

15-713.5 Fines and Penalties. Costs resulting from violations of, or failure to comply with Federal, State and local laws and regulations are unallowable.

15-713.6 Governor's Expenses. The salaries and expenses of the Office of the Governor of a State or the chief executive of a political subdivision are considered a cost of general State or local government and are unallowable.




15-713.7 Interest and Other Financial Costs. Interest on borrowings (however represented), bond discounts, cost of financing and refinancing operations, and legal and professional fees paid in connection therewith, are unallowable except when authorized by Federal legislation.

15-713.8 Legislative Expenses. Salaries and other expenses of the State legislature or similar local governmental bodies such as county supervisors, city councils, school boards, etc., whether incurred for purposes of legislation or executive direction, are unallowable.

15-713.9 Underrecovery of Costs Under Grant Agreements. Any excess of cost over the Federal contribution under one grant agreement is unallowable under other grant agreements.




Part 8-Training and Other Services Educational Institutions

15-801 Purpose. This Part 8 extends the scope of Part 3 to cover the determination of costs incurred by educational institutions under Federal grants and contracts for training and other educational services. (See Appendix O for Cost Accounting Standards Board Cost Accounting Standards.)

15-802 Application. All agencies of the Department of Defense will use Part 3, including this Part 8, as a basis for determining allowable costs under grants and cost reimbursement type contracts with educational institutions for work performed under federally sponsored educational service agreements.

15-803 Terminology. The following definitions are to be used in determining the indirect cost of federally sponsored training and other educational services under this Part 8.

15-803.1 Educational Service Agreement means any grant or contract under which Federal financing is provided on a cost reimbursement basis for all or an agreed portion of the costs incurred for training or other educational services. Typical of the work covered by educational service agreements are summer institutes, special training programs for selected participants, professional or technical services to cooperating countries, the development and introduction of new or expanded courses, and similar instructional oriented undertakings, including special research training programs, that are separately budgeted and accounted for by the institution. The term does not extend to (a) grants or contracts for organized research, (b) arrangements under which the Federal financing is exclusively in the form of scholarships, fellowships, traineeships, or other fixed amounts such as a cost of education allowance or the normal published tuition rates and fees of an institution, or (c) construction, facility, and exclusively general resource or institutional type grants.

15-803.2 Instruction means all of the academic work other than organized research carried on by an institution, including the teaching of graduate and undergraduate courses, departmental research (see 15–302.2) and all special training or other instructional oriented projects sponsored by the Federal Government or others under educational service agreements.

15-804 Student Administration and Services. In addition to the five major functional categories of indirect costs described in 15–306, there is established an additional category under the title “Student administration and services” to embrace the following:

15-804.1 Expenses-Student Affairs. The expenses in this category are those that have been incurred for the administration of student affairs and for services to students, including expenses of such activities as deans of students, admissions, registrar, counseling and placement services, student advisers, student health and infirmary services, catalog, and commencements and convocations. The salaries of members of the academic staff whose academic appointments or assignments involve the performance of such administrative or service work may also be included to the extent that the portion so charged is supported pursuant to 15-809.2. The student administration and services category also includes the staff benefits and pension plan costs applicable to the salaries and wages included therein, an appropriate share of the cost of the operation and maintenance of the



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