Are there exceptions to the direct cost recovery guideline?
Yes. It is commonly accepted that core facilities which incur expenses over a certain annual threshold or generate a disproportionate share of F&A burden that should be excluded from the institution’s research cost base for the purpose of distributing costs (Example A-21 E.2.c. 3&4). Such a core is often referred to as a specialized service center or facility, and generally must recover both direct and indirect costs in the fees charged to users. A-21 and A-122 do not specify an annual threshold amount but based on guidance from the HHS Division of Cost Allocation, the threshold is currently considered to be $1,000,000 in annual expenses. Animal Care facilities at most institutions operate as specialized service centers. An increasing number of other types of core facilities are transitioning to this full cost recovery model. This model can make more transparent the appropriate allocation of costs applicable to operations and so assure other activities do not subsidize the activities o
