Direct Costs are those that can be identified specifically with a particular sponsored project.  These costs are variable and include, but are not limited to: salaries, supplies, operating costs, patient costs, research costs and travel.

Indirect Costs, sometimes called Administrative Costs, are those that support the entire organization or are incurred for common or joint objectives that cannot be easily identified with a specific sponsored project. These include, but are not limited to: costs of administrative personnel, rent, building maintenance, most utilities, general office expenses, and general administrative costs.

Subrecipients and Vendors are third parties who are engaged and compensated by the direct recipient to perform aspects of a funded project. OMB Circular A-133 defines the terms “vendor” and “subrecipient”, and provides guidance for distinguishing between the two relationships.

Subrecipient – an entity that expends awards received from a pass-through entity to carry out a program. In other words, as found in the OMB Circular A-133 Compliance Supplement, “a subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity’s award agreement with the…awarding agency.” (A pass-through entity is an entity that provides an award to a subrecipient to carry out a program.)

Vendor – “a dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a…program….” In other words, as found in the OMB Circular A-133 Compliance Supplement, “a vendor, on the other hand, is generally a dealer, distributor or other seller that provides, for example, supplies, expendable materials, or data processing services in support of the project activities.”

Proper classification of an organization as a subricipient or vendor is essential to compliantly managing your award. This classification determines the responsibilities contracted to an organization and ultimately affects the level of oversight that needs to occur by the awarding entity in order to best manage risks that impact a program’s integrity and overall success.

The federal government has a standardized and complex method of determining an agency’s indirect costs, which results in a Negotiated Indirect Cost Rate. Federal Indirect Cost rates are negotiated with one government agency, then that rate may be honored in any federal grant from any agency.

In order to negotiate a federally-recognized indirect cost rate, an agency must be a direct recipient of federal funds. Agencies that do not have a federally negotiated rate should follow the appropriate OMB Circular for guidance on establishing an organizational indirect cost rate.

Personnel, other than the Principal Investigator, who are important to the successful conduct of the project and will play a significant role in project implementation efforts. There is often a minimum percent of full time effort (FTE) required of investigators classified as Key Personnel on a grant.

Other Significant Contributors are individuals who are committed to participating in certain aspects of the project, but who will not contribute a significant amount of FTE.

The Principal Investigator, or PI, is usually a single individual, although there may be multiple PI’s for certain team science projects. The PI is responsible for the day-to-day management and scientific integrity of the project.

The PI often works closely with a Grants Manager to:

1. Ensure expenses are allowable, reasonable & appropriate for the project; and
2. Adequately document all expenditures in accordance with sponsor and institutional policies and comply with all sponsor terms & conditions.

The Grantee or Grantee Organization, also referred to as the Grant Recipient, is the organization or institution that receives the funds and enters into a legal contract with the funding agency.

The Recipient is legally responsible for all technical and financial aspects of the funded project and is accountable to the funder for all contract deliverables.

The Recipient Agency must have the appropriate administrative infrastructure to assure compliance with all applicable policies, Federal statutes and regulations.