Best practices: Proposal Costs

Per OMB Circular A-21 guideline J.38, proposal cost cannot be assessed to federal grants. (

Proposal costs are the costs of preparing bids or proposals on potential federally and non- federally funded sponsored agreements or projects, including the development of data necessary to support the institution’s bids or proposals. Proposal costs of the current accounting period of both successful and unsuccessful bids and proposals normally should be treated as F&A costs and allocated currently to all activities of the institution, and no proposal costs of past accounting periods will be allocable to the current period. However, the institution’s established practices may be to treat proposal costs by some other recognized method. Regardless of the method used, the results obtained may be accepted only if found to be reasonable and equitable.

Proposal cost such as writing, reviewing, copying, and mailing a proposal cannot not be assessed to a sponsored project. Per OMB guidelines, proposal costs should be treated as an indirect cost (also referred to as F&A [facilities and administration] or overhead). All costs associated during the proposal stage should be charged to unrestricted funding. It is up to the Department/Center to define a business practice of whether the cost should be the responsibility of the PI or the Department/Center.

If a proposal is successful and is awarded, no past proposal cost can then transferred to the new award. Even though the costs were associated with the award they are not deemed research related.

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