Big Four Cost Principles
- Reasonable: A cost is considered reasonable if it is necessary for the performance of the sponsored award, and if its nature and amount reflect the actions a prudent person would take under the circumstances prevailing at the time the cost was incurred.
- Allocable: A cost is allocable to a particular award if the goods or services involved can be directly charged to the award based on the benefit provided.
- Allowable: A cost is allowable if it is permitted as a cost within general federal and state regulations, the terms of a specific award, and/or the institution's F&A rates.
- Consistently Treated: All costs incurred for the same purpose and in like circumstances must be treated uniformly either as direct costs or as indirect (facilities and administrative or F&A) costs.
Cost Allowability Guide
The table below is intended only as a general guide. Always consult the specific terms and conditions of your award, as they ultimately determine cost allowability.
Expense Type | Allowable Costs | Unallowable Costs | Notes /Special Conditions | |
---|---|---|---|---|
🖇 | Administrative & Clerical salaries | If integral to the project, identified in the budget, and approved | Routine/admin salaries not meeting criteria | Requires justification and prior approval. |
📢 | Advertising & Public Relations | Recruitment, procurement ads, and award-related outreach | General promotional ads | Must be explicitly budgeted and linked to award purpose |
🍽 | Business Meals & Alcohol | Meals within GSA rate for project travel | Alcohol, meals above GSA rate | Alcohol is generally unallowable under federal awards unless explicitly approved by the sponsor as part of an approved research protocol |
💸 | Salaries (non-admin) | Effort directly benefiting the project | Supplemental pay, unreasonable increases | Effort must be documented and certified; agency salary caps may apply (e.g., NIH). |
💻 | Computer Services | Essential, allocable, project-specific (typically under $5,000) | General administrative/office use, personal use, or non- essential IT are considered indirect unless justified | Direct charge allowed for dedicated research- computing only unless justified |
🔬 | Equipment | Special purpose ≥ $5,000, budgeted and approved | General-purpose equipment, late award-period purchases | Capitalization threshold = $5,000. Late purchases in the award period may require justification or may be disallowed. |
➕ | Fringe Benefits | At negotiated rate, consistent with policy | Excessive/unapproved benefits | Must use approved negotiated rate (ONR) and applied consistently across projects |
📦 | Materials & Supplies | Project-specific, consumed during award. | General Office supplies | Must be received and used within project period |
🎓 | Participant Support Costs | Stipends, travel, registration, training materials | Honoraria, incentives, employer reimbursement programs | Must be pre-approved or budgeted and not paid to a GT employee |
💼 | Professional Services (Consultants) | Necessary, documented, reasonable external services | Georgia Tech employees cannot be paid as consultants | Contract must define scope, deliverables and cost |
📚 | Publication Costs | Acknowledging the award | Omitting required acknowledgements | Costs must be allocable to benefiting awards |
✈ | Travel & Airfare | Economy class, baggage, Fly America-compliant | Upgrades, alcohol, luxury services, post-award travel | Document agendas; submit expenses within 45 days from the end of trip. |
🏢 | Service Center Charges | Usage-based, itemized bills, applied consistently | Unreasonable or discriminatory charges | Must follow approved rates |
🤝 | Subawards | Budgeted, approved, collaborative scope, monitored. | Unbudgeted or unapproved by sponsor. | Only first $25,000 subject to indirects; requires formal agreement and monitoring. |
🚫 | General Unallowable Costs | N/A | Entertainment, lobbying, personal items, fines, penalties, bad debt | Improper charges must be corrected promptly. Gift cards and first class travel are commonly flagged unallowables. |