Direct Costs

Direct costs are those which can be identified specifically with a particular sponsored project and which can be directly assigned to such activities, relatively easily and with a high degree of accuracy. For example, the supplies needed for a research project are easy to identify, as are the salaries of the individuals who will work on the project as are the travel expenses for those individuals.

Use the navigation outline in the sidebar to the right to learn more about direct costs.

Salaries and Wages

In general, the largest portion of the proposed budget will be allocated to salaries and fringe benefits, so it is important to understand how to present this information and to ensure that the numbers are correct. 

The first step is to determine how much effort of various types of employees will be required to complete the project. The budget justification should describe what each employee will be doing on the project. These decisions have implications downstream because proposed effort becomes committed effort which becomes certified effort.

Next, determine how the sponsors require effort to be presented in the budget. Typically this is either in months or percentages. Some funding mechanisms require effort to be presented in hours or daily rates. Because Duke employees are paid either monthly or on a by weekly basis these two approaches are difficult to impossible to address.

After determining the amount of effort needed, the next step is to collect the Institutional Base Salary (IBS) of all project employees.(Employee Salary Request Form)The IBS is the of salary paid to an employee for 100% of the employee’s University Effort: research, instruction, administration, etc.

                                    IBS X % = Requested Salary

PI/PDs, Co-PIs and Key Senior Personnel (faculty members) are almost always identified by name in the budget. Postdocs, Professional/technical staff, students and staff generally are not and can be identified as To Be Determined (TBD). In these cases the budget should include appropriate estimates based on Duke’s established salary ranges as published Human Resources .

Only Duke employees and TBDs may appear in the Salary and Wages section of the proposed budget with the proposed compensation and fringe benefits. Non-Duke personnel may appear in the budgets as consultants, recipients of honoraria, participant support or as a subcontracting entity with a separate budget.

Duke personnel can be included in budgets with effort and zero dollars. This is referred to as Voluntary Committed Cost-Sharing and requires further reviews and approvals. Some sponsors like the NSF prohibit the inclusion of VCCS.

Faculty members may request academic year salary support or supplement their nine-month salary with up to three months of summer support. For each summer month, they may seek funding for one/ninth of their nine-month salary. Summer salary supplements may be paid for work performed in May, June, July, and August.

If a faculty member is working on several sponsored projects, care must be taken to ensure that no more than 100% of effort is committed to the aggregate of all projects and other university responsibilities. However, a faculty member can have several active submissions that include effort above 100% because many submissions are not funded. If the awards come in, then the faculty member will need to negotiate his effort levels with the sponsors.

NOTE: Some agencies place restrictions on the amount of faculty time they will support during a given year or establish caps on the amount of salary they will cover. For example, generally, NSF will only support two months of effort across all the PI’s grants whereas NIH caps the total salary that they will support.

NIH Salary Cap Summary 

Salaries Above the NIH Cap

Post-doctoral associates may be hired on research grants on a full-time or part-time basis. NIH publishes set rates based on years of experience that are useful for building not only NIH budgets but also budgets for other sponsors as well.

Other professionals such as technicians or programmers may be hired on a full or part-time basis. Technical staff are employees who are providing support functions that are integral to the operations of the lab or directly related to the sponsored project. Examples of support functions include but are not limited to managing lab animals, developing and maintaining protocols for human or animal research, collecting, managing, and securing project specific data, and coordinating research subjects and incentives.

Graduate students may be compensated for up to 100% of their effort from research grants. Graduate student workloads are limited to less than 20 hours per week and effort is usually described in hours.When graduate students work on sponsored research projects they are considered employees of the University. Consequently, all payments are considered wages and are taxable income. Associated Tuition Remission costs must be included in the budget using the Graduate School’s Average Rate Basis calculation.

Often students may be included on Fellowships and Training proposals. Many of these types of mechanisms include: sponsor stipulations to allow other costs associated with the student such as, stipends, tuition, and fees.

NOTE: NIH guidelines restrict payments to graduate students to an amount equal to the maximum amount allowed for a first-year postdoctoral employee at the same institution performing comparable work.

Undergraduate students may work on grants and are usually hired as bi-weekly employees. Undergraduate workloads are necessarily limited to less than 20 hours per week and effort is usually described in hours.

Administrative and Clerical Staff may be supported by sponsored research projects but only under special circumstances. Ordinarily administrative support for grants is considered to be part of the F&A costs in the budget.

Administrative and Clerical Salary Costs


Administrative and Clerical Salaries

Federal regulations state that clerical and administrative salaries should normally be treated as an indirect cost; however it may be appropriate to charge them as direct costs if certain general criteria are met. To qualify the costs must be

  • Integral to the project or activity,
  • Individuals must be specifically identified with the project or activity,
  • Explicitly included in the proposed budget or have the prior approval of the sponsoring agency,
  • Not also recovered as indirect costs.

These requirements do not apply to salaries for technical personnel, graduate students, postdoctoral associates or senior programmatic personnel.

Requesting Employee Salary Information

Additional Links:

Salary Request Form
SPOC Lists

University policy requires that an employee’s Institutional Base Salary (IBS) be used when preparing proposal budgets for external sponsors. Depending on the timing of the proposal and expected start date, salaries may be inflated for anticipated out-year increases or even entered at a higher level if a significant raise is anticipated in the first year, but the starting point is always the IBS and must be verifiable in iForms.  

One of the biggest challenges in preparing collaborative proposals lies in getting timely and accurate salary information for everyone involved. To facilitate work on collaborative proposals that include employees from other departments, the preaward offices have developed two items for your use.

1. SPOC Lists: The SPOC lists let grant managers know whom to ask for information when working with unfamiliar departments.

2. Salary Request Form  - Because salaries are confidential information, use of the form will give the department receiving it a means of verifying the legitimacy of the request. Do not upload or attach the salary document in SPS

The ultimate intent of the form, the procedure and the SPOC lists is to reduce the number of proposals that are returned to the owning organization for salary changes – with the hope that routing for approval will go more quickly and smoothly.  The more information you can provide, the better the chances of this working well.



  •  Prepares salary request forms for all non-dept personnel on the proposal
  •  Emails forms to the appropriate SPOCs


  •  SPOC receiving the email either checks each individual’s salary rate in iForms  or requests the information from the DEPT payroll person
  •  Confirms employee’s agreement to participate and the level of effort
  •  Completes the form for each employee
  •  If applicable, fills out a cost sharing form and obtains required signatures
  •  Returns the form(s) within TWO business days


  •  Enters the salaries in SPS using the IBS amounts provided
  •  Takes into account appointment type and academic year/summer effort differences if applicable
  •  Inflates and prorates in the standard format unless sponsor requirements differ
  •  Enters any required cost sharing in SPS
  •  Routes for approvals 


  •  Reviews the proposal to confirm correct IBS, appointment type(s), cost sharing and level(s) of effort
  •  If correct, approves
  •  If incorrect, returns proposal to owning department with clear explanation of the problem(s)

Salaries Above the NIH Cap

Every year since 1990 Congress has legislatively mandated a provision limiting the amount of salary that can be charged on an employee by employee basis to National Institutes of Health grants. However, the employees must still receive 100% of their IBS from Duke. This means Duke will charge the grant up to the mandated “cap” and then cost share  the difference between the cap and the IBS.

Most faculty appointments on Campus are for nine months with the exception of some Research Professors who have 12-month appointments. It is important for budgetary purposes to understand their appointment types represented in the budget or the calculations can be completely wrong. The NIH Notice linked above illustrates how to calculate salaries above the cap using various scenarios.

Calculating salaries above the cap is easily accomplished in SPS Web. There are several examples provided in the Entering Salaries into SPS document linked at the top of this page.

Preaward Roles and Responsibilities


  • Identifies salaries in the budget above the NIH cap
  • Indicates required cost sharing in SPS
  • Calculates and enters the portion to be covered by NIH in SPS
  • Calculates and enters the cost share portion to be covered by Duke in SPS
  • Completes a Cost Share form with all of the required signatures and uploads into the internal document section of the SPS proposal record


  • Reviews and approves the proposal budget as part of its review
  • Retains the cost share form in the proposal file



  • Indicates the inclusion of salaries above the cap in the budget when transmitting the award to TBS


Fringe Benefits

Additional Links:

Current Rates

Fringe benefit (FB) rates are expressed as a percentage of salary. Separate FB rates are used for federal and non-federal grants and contracts, and those rates are divided by faculty/monthly employees, bi-weekly employees, Ph.D. students and other students. (The rate for students is only to be used when a student is not currently enrolled.) Federal rates are lower as a result of the government's decision to end participation in the tuition reimbursement portion of Duke's FB program.

Duke's FB rates are negotiated with DHHS; however, the negotiated rates usually cover only one fiscal year at a time. The University's Corporate Controller projects FB rates several fiscal years in advance for budget planning purposes. These projected rates have not been negotiated with the Federal Government. Unless the Sponsor stipulates otherwise, faculty are expected to use the projected rates when preparing proposals. The Controller's office notifies the faculty and ORS of changes in the projected rates. Current and recent past rates are available on the Financial Services website.

The budget periods in a proposal do not always correspond to fiscal years. A given budget period may include more than one fiscal year and, therefore, more than one fringe benefit rate would be applicable to that period. The method for resolving this issue depends upon the sponsor and the anticipated award mechanism. For grant proposals, the fringe benefit rate should be prorated across fiscal years. Please note that if you are submitting a DOD contract proposal, you may be required to use the single negotiated rate for all years.

Subrecipients, Subawards, Vendors and Consultants

If another organization, a subrecipient, will be paid by Duke University to conduct part of the proposed project, subawards or subcontracts are the most appropriate mechanisms for the transfer of funds if the following criteria apply:

  1. the funds are to be paid to another university or business rather than to an individual (consultant).
  2. the subrecipient will contribute to the scholarly or scientific design, conduct, and reporting of the project as described in a statement of work.
  3. the subrecipient's portion of the project requires judgment, unique expertise, and original thought.
  4. the subrecipient does not provide identical services to others as their primary business. Examples of identical services include the fabrication or repair of equipment, data processing, and routine analytical and testing services.
Chain of Relationship_NSF_Sponsor_resize.jpg
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Vendor / Consultant

  • Performance is measured against the objectives of the sponsored project
  • Responsible for programmatic decision making
  • Responsible for adherence to applicable federal compliance requirements
  • Utilizes funds to carry out a program of the organization – not to provide goods or services for the program
  • Cannot be an individual
  • Provide goods and services within normal business operations
  • Provides similar goods and services to many different purchasers
  • Operates in a competitive environment
  • Provides goods and services ancillary to the operation of the federal program
  • Not subject to monitoring or reporting requirements of the prime award
  • Universities may create “service centers” to offer such services as survey support, dissemination and data collection for a standard fee.
  • Can be an entity or individual


How to pay outside entities.



  • Subcontract
  • Subaward
  • The Duke University Research Support Services Agreement (RSSA) should be utilized to procure outside services on sponsored codes (20X, 30X-35X, 38X, 293, 393 and A03).
  • This agreement should be used only when a determination is made that the entity is a vendor using the Checklist to Determine Subrecipient or Contractor Classification


Equipment Costs

Capital equipment is defined by the University as a permanent asset costing $5,000 or more per unit and having a useful life of at least two years. The cost of shipping and installation is included in the cost of the equipment.

The budget should specify the name and manufacturer of the equipment whenever possible. Sponsors may want to see the manufacturer's specifications and price list, particularly if the equipment is very expensive.

Software: Operational software is purchased in conjunction with hardware and is considered part of the purchase price. Software applications which are purchased separately are considered equipment if they meet the dollar threshold per licensed user as described above. Leased software is not identified as capital equipment, regardless of cost.

Warranties: Extended warranties are not capitalized under Duke policy and should go in the "other direct costs" category.

Fabrication: If a project will need equipment which is not commercially available and must be fabricated, all the costs associated with its fabrication will be considered part of the cost of the equipment.

The final cost of fabricated equipment should be estimated, included in the equipment category, and excluded from F&A cost recovery. The budget narrative should clearly identify all of the costs which will be associated with the production of the equipment, such as materials, salaries, and travel. Sponsored Programs has postaward accounting procedures to track expenses associated with fabrication. When the equipment is completed it will be tagged and inventoried.

Buy American: If a contract is used to fund the proposed research, the purchase of non-U.S. manufactured equipment may require special authorization under the Buy American Act. The contact for information about the Buy American Act is:

Equipment Screening Form: The Equipment Screening Form is required for purchases made on reportable projects. The form will require signatures from a Departmental Representative confirming that they have reviewed the completed form and related attachments. The completed form must appear in the Notes and Attachment section of the Buy@Duke Cart. Questions regarding allowability or procedure should be directed to your OSP liaison.

What does this mean for PIs?

The PIs should expect to have conversations with their Grant Manager (GM) regarding the scientific or programmatic needs of the project. They should note that convenience is not a sufficient reason.

What does this mean for GMs?

GMs should expect to have conversations with their PI and Departmental Representatives regarding the scientific or programmatic needs of the project and how they are furthered by the purchase of the capital equipment.

Director of Research Procurement
Procurement Services, Box 91005
Phone: (919) 613-8350

Supplies and Materials

The Supplies & Materials budget category applies to consumable supplies, regardless of cost, and equipment with a unit value of under $5,000 or a useful life of under two years. Supplies should be listed by general type such as chemicals or glassware.

General office supplies, such as paper, staples, pencils and pens and non-capital equipment such as calculators and printers, are generally not allowable on federal grants unless they can be directly allocated to specific project and are fully explained in the budget justification. This budget category can be supported by general descriptions of the type of supplies included and a best estimate of their cost. 

If the awarded budget includes general office supplies, the department must complete a CAS form.

Computing Devices

Additional Links: 

UGC 3.0 Computing Devices

Under the OMB Uniform Guidance, computing devices are allowable direct costs on federal awards if the devices are “essential and allocable,” and they do not have to be solely dedicated to the project. Computing devices are defined as machines used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information.

Duke has determined that cell phones do not meet the definition above and are unallowable as direct costs on federal awards except in exceptional circumstances. Best practice would dictate that purchases of cell phones on Federal Grants should be budgeted and well justified in the proposal.

General Purpose Supplies and Local Telephone Services

The University provides general office and data processing equipment and supplies to its faculty and staff. Only supplies and equipment which will be used for grant activities can be considered a direct cost and the expense must be clearly justified.

Local telephone service is a departmental administrative cost, however, if a phone or line can be identified exclusively with a project and will only be used for research or project activities, permission may be secured to charge the line as a direct cost. Examples of services which would meet the criteria are:

  • a modem used for twenty-four hour collection of seismic data from around the country
  • a hot-line reserved for participants on a research study

By contrast, providing a phone for a new member of a research team is an expense which the university should cover with unit funds.

Travel Costs

For each trip, the proposed destination, purpose and duration of the trip should be described. An estimated breakdown of expenses for each person traveling should include:

  1. round trip coach air fare
  2. per diem or living expenses
  3. other related expenses such as ground transportation, conference registration fees, and short-term Visa fees, etc.

For use in federal projects, the General Services Administration publishes the maximum allowable Federal per diem rates for U.S. and foreign cities.

The Federal Government imposes strict regulations regarding the use of U.S. flag carriers and the class of ticket a grantee must purchase. See Fly America Act

Participant Costs

Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not Duke employees) in connection with conferences, or training projects. Participant support costs are allowable expenses with the prior approval of the federal sponsor; funds budgeted for participant support costs can generally be rebudgeted to other costs only with the sponsor prior approval.

This category is used primarily for conference proposals or training proposals such as NSF Research Experiences for Undergraduates (REU) proposals where the students come to Duke from other universities and colleges.

NOTE: Participant support costs are managed on subcodes because they must be accounted for separately and excluded from the calculation of the F&A costs

Subcontracts - During Submission Process


Documentation Required by Duke University from Subrecipients Prior to Proposal Submission

  1. A statement of work

  2. A corresponding budget and budget justification

  3. A cover letter or commitment signed by an authorized official of the participating institution(s) and

  4. If required by the sponsor, the recipient institution(s) may need to provide certifications and representations, other support documentation, biosketches, signed cover pages, DUNS, etc.

  5. PHS and NSF Only: The subrecipient must attest to its compliance with prime sponsor FCOI regulations and agree to abide by its own compliance policies or follow Duke's policies.


Best Practice: Each subrecipient packet should be scanned and uploaded into SPS as ONE PDF. (See samples)

It is critical that all required forms be signed by an authorized institutional officer. A signature from the participating PI, a department chair, or dean will not suffice to commit the institution.

When preparing the Duke budget, include the total cost of each subaward, including the recipient institution's Fringe Benefits costs and F&A costs, as a line item in the direct cost section of the budget proposal.

After receiving the award, ORS will write and issue the subawards.

Collaborative proposals, if allowed by a sponsor, are an alternate mechanism for joint projects with other institutions. The funds awarded for collaborative proposals go directly from the sponsor to each of the collaborating institutions simultaneously and eliminate the need for subawards from a lead institution to the other participating institutions.

Other Direct Costs

Examples of "Other Direct Costs" which may be included in proposal budgets include:  

  • equipment and computer maintenance or user fees
  • extended warranties for equipment
  • publication costs and page charges
  • photocopying
  • communication costs such as long-distance telephone and facsimiles
  • fees for shared resources
  • incentives for human subjects
  • tuition remission