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last updated 01/14/11November 20, 2009
As a recipient of Federal Funds, Northwestern University is required to adopt costing policies in conformance with Federal rules and regulations. The University's cost accounting practices are declared in the required filing of its Disclosure Statement (called the DS-2) to the audit agency of the US Department of Health and Human Services The DS-2 defines costs that can be directly charged to sponsored programs as being allowable, allocable, reasonable, and consistently applied. Costs that support sponsored research on an indirect basis are also defined. Additional applicable Federal guidance in this area is provided by OMB Circular A-21, as well as Circular A-110. In general, personal computers and other electronic devices are not an allowable direct cost.
This statement is intended to help Principal Investigators and their staffs understand the appropriate costing treatment of personal computers and other electronic devices in the context of existing University policy as well as emerging Federal agency guidance. Over time, as the cost of personal computers and electronic devices has decreased, it often does not reach the level of capitalizable equipment (unit acquisition cost of $5,000 or more) that has commonly been associated with eligibility to be charged to sponsored projects. However, regardless of the dollar value of the expenditure for any equipment, the acquisition of computing and electronic devices must still meet the criteria of allowability, allocability, reasonableness, and consistent application such that the equipment can clearly be shown to directly benefit the achievement of required sponsored research objectives. The Federal government, through audits of universities, specific denial of requests in notices of award, and information dissemination at professional meetings such as the Federal Demonstration Partnership and Council of Governmental Relations, has consistently apprised the research community that it does not consider personal computers and electronic devices to be an appropriate direct cost to sponsored projects. This is because general purpose computing support is considered to be an administrative cost covered by F&A reimbursement.
Because computers and electronic devices are generally used for many different activities (for example, instruction, research, administration, email, personal use), the default presumption is that these devices cannot meet the threshold requirements to allow the direct charging of their acquisition to a sponsored project.
In all cases, purchases must conform to the cost principles for educational institutions described in the OMB Circular A-21. Costing guidelines specify that charges for computers and laptops, as with all other charges directly charged to Federal awards, must meet the following conditions:
In some cases, however, the use of personal computers and electronic devices specifically required for individual research projects can be justified as directly benefitting those awards. In specific situations, the purchase of personal computers and electronic devices can be an allowable direct charge to Federally funded projects when the conduct of the research requires a computer, e.g., the computer is attached to a piece of equipment and is required for collection or analysis of data for the project or the computer is specifically needed to record data while in the field, such as an archeological site. In such situations, the computer or electronic device must be used either exclusively or primarily for the project. The use of a computer to store non-sponsored projects information or for use outside of the lab or office where the research is conducted (except for field work) is likely to raise the question during an audit of the allowability of the laptop on a sponsored project.
To sustain an auditable justification of the allowability of computers charged directly to a Federal award, the computer must be used primarily (at least 95%) for the programmatic conduct sponsored project. If a computer is 100% funded from a Federal sponsor, the computer should not be used for non-programmatic purposes on more than an incidental basis. Criteria for consideration include: (not all encompassing, nor are all required):
Documentation of Unlike Circumstances
In order to minimize disallowed costs through audit findings, personal computers and electronic devices with a unit cost of less than $5,000 will not be allowed as an approved expenditure on research funds unless unlike circumstances have been documented. That is, the need has been included in the original proposal and completely justified as to the reason it is being included, the purpose and benefit to the project have been fully described, it has been made clear that the project will be negatively impacted by not purchasing the computer, and it has been approved by the sponsor.
To provide evidence of unlike circumstances, the Principal Investigator must document in the proposal that the use of the computer is beyond the normal and customary use and application of computers in the day-to-day operations of the laboratory, how the computer directly benefits the project and how it is different from similar items provided by the department or department that are treated as F&A costs. OSR must approve of the sufficiency of detail in the request. The lack of documentation could call into question the allowability of the purchase on the sponsored project. Once full documentation has been provided to the sponsor, the University will allow the direct expense to the chart string unless the sponsor has disapproved the request.
If the need for a personal computer or electronic device develops during the project and was not requested in the original budget, the PI must provide documentation of unlike circumstances to OSR for review and approval. The criteria described in the paragraph immediately above must be addressed when the request is made of OSR.
Purchase of Personal Computers and Laptops with a Unit Acquisition Cost
of $5,000 or More on Sponsored Projects
Computers and electronic devices with a unit cost of $5,000 or more are considered capital equipment and are allowable as direct costs to Federal grants and contracts, provided that the equipment purchase conforms to all of the costing principles described above in this document. The primary determinant of allowability is the requirement that the equipment is necessary to fulfill the objectives of the sponsored project; the dollar value is not sufficient in and of itself to permit allocation to an award.
Examples of Specific Sponsor Guidance
Specific guidance varies significantly by sponsor and some Federal agencies may further restrict the allowability of computers. Below are examples of language from several agencies that fund research at Northwestern. As supplementary guidance, excerpted below are policy statements regarding laptop computers from several Federal agencies that fund research at Northwestern:
NIH Grants Policy Statement
Direct Costs and Facilities and Administrative Costs Project costs consist of the allowable direct costs directly related to the performance of the grant plus the allocable portion of the allowable F&A costs of the organization, less applicable credits (as described below and in the cost principles). A direct cost is any cost that can be specifically identified with a particular project, program, or activity or that can be directly assigned to such activities relatively easily and with a high degree of accuracy. Direct costs include, but are not limited to, salaries, travel, equipment, and supplies directly benefiting the grant-supported project or activity.
Several recently awarded NIH grants have specifically disallowed the purchase of computers in the Notice of Award, citing: "This award does not include funds for the support of computers, and printers as requested in the application. In accordance with OMB Circular A-21, these costs are considered unallowable as direct costs, but, if appropriate, may be charged to the project as F&A costs."
NSF Proposal and Award Policies and Procedures Guide
General Purpose Equipment. Expenditures for general purpose equipment are unallowable unless the equipment is primarily or exclusively used in the actual conduct of the research.
GENERAL PURPOSE EQUIPMENT permanent equipment that is usable for
research, medical, scientific or technical activities, whether or not special modifications
are needed to make it suitable for a particular purpose. Examples of general purpose
equipment include office equipment and furnishings, air conditioning equipment,
reproduction and printing equipment, motor vehicles and computer equipment.
NASA Guidebook for Proposers
General purpose equipment (i.e., personal computers and/or commercial software) is not
allowable as a direct cost unless specifically approved by the NASA Award Officer. Any
general purpose equipment purchase requested to be made as a direct charge under this
award must include the equipment description, an explanation of how it will be used in
the conduct of the research proposed, and a written certification that the equipment will
be used exclusively for the proposed research activities. The need for general purpose
items that typically can be used for research and non-research purposes should be explained.
Purchase of Personal Computers and/or Software. Such items are usually
by NASA to be general purpose equipment that must be purchased from general,
organizational overhead budgets and not directly from the proposal budget unless it can
be demonstrated that such items are to be used uniquely and only for the proposed
Frequently Asked Questions
Q. What criteria may be used to determine whether a personal computer cost is or is not exceptional?
A. Computer uses that are considered exceptional and a basis for computer purchase on sponsored projects:
1. Controlling an instrument
2. Acquiring data from an instrument
3. Numerical calculations and simulations
4. Image and video analysis
5. Data analysis and manipulation
6. Data mining
7. Writing computer code
8. Data storage for the sponsored projects
9. Preparation of testing materials and recording of participant responses
Computer uses that are not considered exceptional:
1. Preparing proposals
2. Preparing progress reports related to the research
3. Preparing publications related to the research
4. Preparing presentations related to the research
5. Accessing library resources (journals, books, etc)
6. Administrative activities including email, internet research, budgeting, procurement, human resource management, effort reporting
Questions regarding this policy can be directed to the Office for Sponsored
Research or Accounting Services for Research and Sponsored Programs.
Office for Research - 633 Clark Street, Evanston, IL 60208-1108
The Office for Research promotes, facilitates and enhances research at Northwestern University.
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