Direct and Indirect Cost Allocations Under OMB Uniform Guidance


This policy applies to all George Mason University (university) locations, organizations, faculty, and staff.


It is essential for both financial statement and cost accounting purposes that the university adheres to a uniform policy with respect to the assignment and allocation of costs. This policy addresses the incorporation of Cost Accounting Standards (CAS) into the Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (OMB Uniform Guidance).


  1. Direct Cost. Direct costs are those expenditures that can be identified specifically with a particular sponsored project, instructional activity or any other activity, relatively easily and with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. Where the university treats a particular type of cost as a direct cost, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution. Cost that might be incurred for the common or joint objectives of several research projects, but which cannot be specifically attributed to a particular sponsored project with a high degree of accuracy, may not be directly charged to these projects.
  2. Indirect Costs (Commonly called Facility and Administrative Cost or F&A). Indirect costs are those expenditures or costs that are not readily identifiable with a particular project or activity, but nevertheless are necessary to the general operation of the university and the conduct of its activities. The types of expenses usually considered as indirect costs include the cost of operation and maintenance of buildings and grounds, equipment, libraries, and the costs of academic central administrative units.


The university is responsible for developing a set of uniform operating principles and guidelines that assures compliance with OMB Uniform Guidance, which provides specific guidance on classifying expenditures as either direct or indirect costs. The university is responsible for disseminating this information to all faculty and staff, and for overseeing implementation of these principles and guidelines. These responsibilities are delegated by the Senior Vice President and the Provost to the Fiscal Services Division and the Office of Sponsored Programs.

A. The Fiscal Services Division is responsible for:

  • Establishing all university fiscal policies consistent with OMB Uniform Guidance;
  • Developing and negotiating Facilities and Administration (F&A) rates with the cognizant Government agency;
  • Reviewing and concurring with proposals for changes in cost accounting practices; and
  • Developing and negotiating cost impact statements resulting from changes in the university’s cost accounting practices.

B. The Office of Sponsored Programs is responsible for:

  • Providing administrative guidance and support to the university community in its sponsored programs efforts;
  • Developing and negotiating federally sponsored agreements that budget expenditures as direct or indirect costs consistent with OMB Uniform Guidance;
  • Approving or reviewing on a post audit basis, actual expenditures charged to federally sponsored agreements as direct or indirect costs consistent with OMB Uniform Guidance;
  • Ensuring that the university’s financial and contractual rights are protected (see University Policy 4006, Sponsored Programs); and
  • Providing principal investigators with the information necessary to fulfill their sponsored project fiduciary and sponsored project management responsibilities.

C. Central Administration is responsible for spending its allocation of recovered indirect costs in support of research activities.

D. All colleges, schools and institutes are responsible for implementing and monitoring policies and procedures, and for providing the support necessary to ensure project goals can be accomplished. Units are required to spend their allocation of recovered indirect costs in support of research activities.

E. Individual Principal Investigators (PIs) are responsible for scientific and budgetary decisions related to contracts and grants. PIs also are responsible for ensuring the accurate allocation and assignment of costs to a specific contract/grant (i.e., the project fund which incurred the expense). (See also University Policy 4006.) PIs are required to spend their allocation of recovered indirect costs in support of research activities.


A. OMB Uniform Guidance: 

B. Federal Acquisition Regulations (FAR):
Subpart 30.201-4(e), Cost Accounting Standards – Educational Institutions (VOL1)
Subpart 31.104 and Subpart 31.3, Contracts with Educational Institutions (VOL 1)
Subpart 52.230-5, Cost Accounting Standards – Educational Institutions (VOL 2)


Failure to comply with federal regulations, circulars, and cost accounting standards may result in repayment of disallowed costs, and assessment of fines, penalties, and interest by the federal government.


This policy is effective January 31, 2006, and was revised May 11, 2015. This administrative policy shall be reviewed and revised, if necessary, annually, with changes to become effective at the beginning of the university’s fiscal year, unless otherwise noted.


Carol D. Kissal
Senior Vice President, Administration and Finance

Mark R. Ginsberg
Provost and Executive Vice President

Approved: January 31, 2006
Revised: January 23, 2008
Revised: May 11, 2015
Revised: May 18, 2021