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CONTRACT COST PRINCIPLES AND PROCEDURES

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.

15-713.9

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT COST PRINCIPLES AND PROCEDURES

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

15-804.1

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT COST PRINCIPLES AND PROCEDURES

physical plant, and charges representing use allowance or depreciation applicable to the buildings and equipment utilized in the performance of the functions included in this category.

15–804.2 ExpensesInstruction Activity. The expenses in this category are generally applicable in their entirety to the instruction activity. They should be allocated to applicable cost objectives with the instruction activity, including educational service agreements, when such agreements reasonably benefit from these expenses. Such expenses should be allocated on the basis of population served (computed on the basis of full-time equivalents including students, faculty, and others as appropriate) or other methods which will result in an equitable distribution to cost objectives in relation to the benefits received and be consistent with guides provided in 15-305.2.

15–805 Direct Costs of Educational Service Agreements. Direct costs of work performed under educational service agreements will be determined consistent with the principles set forth in 15–304.

15–806 Indirect Costs of the Instruction Activity. The indirect costs of the instruction activity as a whole should include its allocated share of administrative and supportive costs determined in accordance with the principles set forth in 15-804 and 15-306. Such costs may include other items of indirect cost incurred solely for the instruction activity and not included in the general allocation of the various categories of indirect expenses. Costs incurred in behalf of the institution by State and local governments are allowable as provided for in 15–303.6.

15-807 Indirect Costs Applicable to Educational Service Agreements. The individual items of indirect costs applicable to the instruction activity as a whole should be assigned to (1) educational service agreements, and (2) all other instructional work through use of appropriate cost groupings, selected distribution bases, and other reasonable methods as outlined in 15-305.2. A single indirect pool may be used for all educational service agreements provided this results in a reasonably equitable distribution of costs among agreements in relation to indirect support services provided. However, when the level of indirect support sig. nificantly varies for work performed either on campus or off campus under a particular agreement or group of agreements, separate cost pools should be established consistent with the principles set forth in 15–307.1(b). Where direct charges are provided for under educational service agreements for such things as commencement fees, student fees, and tuition, the related indirect costs, through separate cost groupings, should be excluded from the indirect costs allocable to the service agreements.

15–808 Indirect Cost Rates for Educational Service Agreements. An indirect costs rate should be determined for the educational service agreement pool or pools, as established under 15-807. The rate in each case should be stated as the percentage which the amount of the particular educational service agreement pool is of the total direct salaries and wages of all educational service agreements identified with such pool. Indirect costs should be distributed to individual agreements by applying the rate or rates established to direct salaries and wages for each agreement. When a fixed rate is negotiated in advance of a fiscal year, the over- or under-recovery for that year may be included as an adjustment to the indirect cost for the next rate negotiation as in 15-307.4 and 15–307.5.

15-808

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT COST PRINCIPLES AND PROCEDURES

15--809 General Standards for Selected Items of Cost. The standards for selected items of cost as set forth in 15–309.1 through 15–309.46 applicable to research agreements will also be applied to educational service agreements with the following modifications:

15–809.1 Commencement and Convocation Costs (15–309.5). Expenses incurred for convocations and commencements apply to the instruction activity as a whole. Such expenses are unallowable as direct costs of educational service agreements unless specifically authorized in the agreement or approved in writing by the sponsoring agency. For eligibility of allocation as indirect costs, see 15-804.

15–809.2 Compensation for Personal Services (15–309.7). Charges to educational service agreements for personal services will normally be determined and supported consistent with the provisions of 15–309.7. However, the provisions for stipulated salary support will not be used for educational service agreements. Also, charges may include compensation in excess of the base salary of a faculty member for the conduct of courses outside the normal duties of such member provided that: (i) extra charges are determined at a rate not greater than the basic salary rate of the member; (ii) salary payments for such work follow practices consistently applied within the institution; and (iii) specific authorization for such charges is included in the educational service agreement.

15–809.3 Scholarships and Student Aid Costs (15–309.35). Expenses incurred for scholarships and student aid are unallowable as either direct costs or indirect costs of educational service agreements, unless specifically authorized in the educational service agreement or approved in writing by the sponsoring agency.

15–809.4 Student Activity Costs (15–309.40). Expenses incurred for student activities are unallowable as either direct costs or indirect costs of educational service agreements, unless specifically authorized in the educational service agreement or approved in writing by the sponsoring agency.

15-809.5 Student Services Costs (15–309.41). Expenses incurred for student services are unallowable as direct costs of educational service agreements unless specifically authorized in the agreement or approved in writing by the sponsoring agency. For eligibility of allocation as indirect costs, see 15-804.

15-809.5

ARMED SERVICES PROCUREMENT REGULATION

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