Recovery of payment to Colorado State University, B-280018, January 27, 2000

B-280018 Jan 27, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights We think it is more appropriately resolved by administrative officers charged with claims collection responsibilities. We are providing the following information that may be of assistance to you in analyzing this matter. The University's Center agreed to conduct ecological research studies of mutual interest to the government and the University for the Department of Defense (DOD). /3/ At issue is application of the Act's cost reimbursement provision. Require that agreements made pursuant to the Act are to conform to the provisions of OMB Circular A-21. 7 C.F.R. It defines indirect costs /4/ as "costs that are incurred for common or joint objectives and. The IG reported that the agreement with the Center was only one of a number of cost-reimbursable agreements that the Forest Service had with the University. View Decision Recovery of payment to Colorado State University, B-280018, January 27, 2000 Mr. David L. Burich Authorized Certifying Officer United States Forest Service 14th & Independence, SW, P.O. Box 96090 Washington, DC 20090-6090 Subject: Recovery of payment to Colorado State University Dear Mr. Burich: This responds to your request for our advice concerning a $425,952 payment by the Forest Service for administrative personnel expenses treated as direct, rather than indirect, costs under a cost-reimbursable research agreement between the Forest Service and the Center for Ecological Management of Military Lands (Center) at Colorado State University (University). The Forest Service also paid $42,595 to the University as indirect costs, calculated as ten percent of the direct costs, resulting in a total payment of $468,547. The Inspector General (IG), Department of Agriculture, has questioned the payment of this amount, contending that the University had presented insufficient documentation of these costs. Given the posture of this matter and the factual gaps in the record, we think it is more appropriately resolved by administrative officers charged with claims collection responsibilities. Nevertheless, we are providing the following information that may be of assistance to you in analyzing this matter. In 1992, the Forest Service entered into a cost-reimbursable research agreement with Colorado State University (Cost-Reimbursable Agreement 28-CR2-626, 1992) under authority of the National Agricultural Research Extension and Teaching Policy Act of 1997 (the Act), 7 U.S.C. Sec. 3319a. The Act authorizes the Secretary of Agriculture to enter into cost-reimbursable agreements with educational institutions to carry out agricultural research, extension, or teaching activities of mutual interest. /2/ 7 U.S.C. Sec. 3319a. The University's Center agreed to conduct ecological research studies of mutual interest to the government and the University for the Department of Defense (DOD). /3/ At issue is application of the Act's cost reimbursement provision. The Act specifies that "[r]eimbursable costs under such agreements shall include the actual direct costs of performance, as mutually agreed on by the parties, and the indirect costs of performance, not exceeding 10 percent of the direct costs." 7 U.S.C. Sec. 3319a. The Act does not define direct or indirect costs. Agriculture Department regulations, however, require that agreements made pursuant to the Act are to conform to the provisions of OMB Circular A-21. 7 C.F.R. Sec. 3016.22(b). In that regard, the Forest Service agreement with the University provided that "[a]ll applicable laws, regulations, Executive Orders and other generally applicable requirements . . . form a part of this agreement," effectively incorporating into the agreement the provisions of Agriculture's regulations and OMB Circular A-21. The OMB Circular defines direct costs as "those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily and with a high degree of accuracy." OMB Circ. No. A-21, sec. D.1. It defines indirect costs /4/ as "costs that are incurred for common or joint objectives and, therefore, cannot be readily and specifically identified with a particular sponsored project, an instructional activity, or any other institutional activity." OMB Circ. No. A-21, sec. B.4. For the period June 1992 through January 1996, the University charged administrative personnel costs of $425,952 to the Forest Service as direct costs. The Forest Service paid this amount, as well as an additional $42,595 for indirect costs, calculated at ten percent of the amount allowed as direct costs. In March 1997, the IG reported on an audit of the Forest Service's cost-reimbursable research agreements, and questioned the Forest Service's payment of these administrative personnel costs as direct costs. USDA OIG, Audit Report No.