What are 'Direct Costs' in the context of federal budgeting?

In the context of federal budgeting, direct costs refer specifically to expenses that can be directly traced back to a particular project or program. These costs include items such as salaries for personnel working directly on the project, materials and supplies purchased specifically for the project, and any other expenses that can be explicitly tied to a single initiative.

This definition highlights the clear linkage between direct costs and the specific outcomes they support, making them essential for accurate budgeting and financial reporting in federal projects. Understanding direct costs is crucial for financial managers to ensure proper allocation of funds and to maintain transparency and accountability in federal financial management.

Other expense categories like administrative overhead, general expenses for multiple projects, or marketing costs do not meet the criteria of being directly tied to a specific project. Instead, they represent indirect costs that support multiple activities across the organization but cannot be attributed solely to one project.