Tracking COVID-19 Expenses for Optimal Cost Recovery

David Moore
Manager, Education, Nonprofit, and Commercial Services

When first considering the impact of COVID-19 on the facilities and administrative (F&A) rate at your research institution, it will be important to track and assess new costs to meet the demands created by the pandemic. Generally speaking and where appropriate, pooling these expenses with your institution’s operations and maintenance expenses provides significant opportunities. As an uncapped indirect cost pool with a variety of sub-pooling opportunities, the operations and maintenance (O&M) pool and sub-pools have the highest potential to optimize your institution’s rate.


One change that organizations of any size can expect from a transition to the next normal, where constituents return onsite, is an increase in cleaning and sanitation to combat the spread of the virus. Individuals returning for classes or work need to feel safe and comfortable with their environment. With this in mind, organizations can maximize their ability to recover indirect costs related to cleaning by making the right selections in their accounting systems to track these costs.

While cleaning costs already exist as part of the typical everyday operations, special attention should be paid to any enhanced cleaning protocols directly related to lab areas that are above and beyond what is being done for non-lab areas, such as extra cleaning intervals or additional sterilization measures. For these activities, institutions should seriously consider creating new accounting codes to track lab cleaning costs. Ideally, these additional costs for lab areas would be tracked in the institution’s accounting system with a specific code so that the costs can be easily identified during the next F&A proposal. This will streamline the cost tracking and reduce the risks of not being able to identify the costs, should a secondary tracking system break down.

Another important decision is who is going to oversee, monitor, and incur these costs. This will likely dictate how they can be treated in the F&A rate proposal. The three potential areas to allocate these costs are:

  1. Environmental Health & Safety
  2. Facilities Management
  3. Academic Departments

Since Environmental Health and Safety (EH&S) already has specific oversight of removing hazardous materials from lab areas, the best practice is to make lab cleaning costs part of the EH&S department, which is typically a separate O&M sub-pool. This will allow for an easy allocation of these costs based on lab and lab service square feet, which is an appropriate treatment and results in the highest recovery of the costs

While including lab area cleaning costs as part of EH&S is the best treatment, conducting any of these allocations as opposed to the general university or campus-wide sub-pool, the portion of these costs that will be attributable to research will likely be higher, which will cause an increase in the F&A rate.

You may also consider including these costs in the facilities management budget. However, this may cause them to lose their identity and become part of the overall facilities management operating expenditures. If this happens, the costs will most likely be identified to buildings and allocated on building square footage. Since these are costs related to lab areas, this is the least optimal choice for recovery as the percent of research space for an entire building is almost always lower than that of lab areas.

Should these costs be incurred within academic departments, they would likely be transferred into the departmental O&M sub-pool and allocated based on the space of the departments. While this would likely result in higher recovery versus including them with facilities management, it is still not ideal as the costs will be allocated to non-lab areas, which will lower the recovery of these costs as part of the F&A rate.

Tracking of PPE

Similar to cleaning costs, the expenses related to Personal Protective Equipment (PPE) will have an outsized impact when compared to previous years. Special care should be used to identify and track these costs specifically. As a best practice, create new codes (e.g., subaccount, object) within the institution’s accounting system if they do not already exist. This way, the costs can easily be identified when your institution prepares the F&A proposal. Another consideration is to determine if there is a significant difference in PPE costs for lab areas relative to all other areas. If so, it may be beneficial to track lab and non-lab PPE costs separately.

Once these costs are identified, they should be moved to O&M as these costs are for the security of the institution. If the identified PPE costs encompass all areas of the institution, they can be left in the campus-wide O&M pool. However, if the PPE costs for lab areas are tracked separately, they should be assigned to an O&M sub-pool, thereby allocating the costs to the benefiting lab areas. The EH&S sub-pool may accommodate this, but the institution should determine if a new sub-pool needs to be created to allocate the costs appropriately.

Contact Tracing & Testing

We know that many institutions will be conducting some level of contact tracing and testing on their campuses to supplement state and national efforts. These efforts should include some form of manual contact tracing, development and enforcement of new policies, and campus-wide testing. However, they may extend as far as the development or implementation of new applications to support contact tracing or workforce management. Each of these activities will incur costs in a variety of categories. These costs should also be considered so that they can be be treated appropriately in the F&A proposal. Because they are incurred as part of the security function of the institution, these costs belong in the O&M pool.


While renovation costs may be the furthest afield from the current situation, the given magnitude of expense is high enough that it’s worth considering the implications as soon as possible. Should the current environment persist for an extended amount of time, institutions may consider pursuing lab renovations or retrofitting to divide lab space to minimize the potential for the virus to spread while maximizing active research.

If the project expense is above the institution’s capitalization threshold, the cost will be reflected in the depreciation used for the F&A proposal. If the project is below the capitalization threshold, accounting for the renovation expense becomes essential.

If the facilities management department incurs the cost, then the best practice is to identify the project to the building and allocate it based on the square footage of the building. However, if an academic department pays for the renovation, then it needs to be identified separately. Costs should still be included as part of the O&M sub-pool, but can be part of the departmental O&M sub-pool and will be allocated based on the space of the department.


COVID-19 related costs are likely to be significant to an institution’s F&A rate proposal preparation and should be an area of focus during the next rate-setting cycle. In summary, the following steps should be taken for any new COVID-19 costs:

  1. Determine if the costs for lab and lab service areas are significantly higher than for non-lab areas.
  2. Identify and track the expenses in the accounting system for easy identification and inclusion into the correct O&M sub-pool.
  3. Ensure the costs are genuinely O&M costs to be included in the O&M pool.
  4. Allocate the costs based on the appropriate space that supports the cost.

About the Author

David Moore

David Moore is a Manager in Attain's Education, Nonprofit, and Commercial Services practice. Since 2005, he has specialized in guiding higher education and academic medical center institutions on F&A proposal preparation and negotiation, F&A diagnostic reviews, space functional usage studies, service center rate calculations, and other costing issues. He is also the solution manager for AttainSpace and AttainRate. Mr. Moore is a frequent presenter at conferences, webcasts, and webinars on these subjects.

By David Moore, Manager, Education, Nonprofit, and Commercial Services