University of Florida's Indirect Cost Recovery Policy on Grants and Contracts with Government, Industry and Foundations

The indirect cost rate negotiated with the U.S. Department of Health and Human Services (University of Florida's cognizant audit agency) reflects the rate of reimbursement for real, audited, facilities and administration costs incurred in the conduct of research. Included among these costs are: depreciation and use allowance costs of buildings and equipment, maintenance and repairs, janitorial services and utilities; hazardous waste disposal; libraries; and general administrative costs such as sponsored programs administration, departmental and general administration (accounting, purchasing, legal services, personnel compliance). These costs are "indirect", or general research support costs, because they are not included in the "direct" portion of the budget allocated for specific project research and, in general, cannot be ascribed to an individual project. They relate to the conduct of sponsored programs in general, regardless of the source of funding, and therefore must be applied to all grants and contracts.

Although the indirect cost rate is negotiated with the Federal government to recover university costs of providing research services to the government, a study conducted by the Office of Science and Technology Policy, the Council on Governmental Relations, and the Association of American Universities on the cost of Federal research paid by universities revealed "that most universities collected 'considerably less' in indirect cost reimbursements than their total overhead costs for the conduct of research." Moreover, the Federal government is only one of the partners of the University of Florida in sponsored research. Contracts and grants are negotiated with companies and other organizations in the private sector in order for them to gain access to faculty expertise, graduate student talent, specialized equipment, libraries and computing services and to the well established basic research laboratories at the University of Florida. The costs for this infrastructure must be paid for regardless of the research partners involved. The University of Florida cannot provide at no cost or low cost the facilities and services for which it requires full reimbursement from the Federal government.

Therefore, beginning July 1, 1995, all grants, contracts and agreements accepted from any sponsor to fund University research must be charged the full on-campus and off-campus indirect cost rates established for Federal awards (with the exception of clinical trials which have a standard indirect cost rate of 25% of total direct costs [TDCs]).

It is recognized that some private foundations, and even some programs of Federal and state funding agencies, have an established policy that restricts the rate of indirect cost payment (e.g., research costs associated with competitive grants of the USDA are reimbursed at 19% rate; NIH training grants at 8%; the State of Florida Agencies at 5%; and 25% is the rate for local governments, municipalities, counties, and water management districts in Florida). Some other organizations will pay no indirect costs to an institution. The University of Florida can accept funds from these organizations as long as their policy information stipulating such is provided to the Division of Sponsored Research at the time a proposal or application is submitted and the University agrees to cost sharing, usually mandatory in the case of Federal agencies, or voluntary in the case of private organizations. In this way the University is in compliance with its own policy to charge the full indirect cost rate to all sponsors. Cost sharing refers to nonreimbursed costs by the University and/or "in kind" contributions of non-cash services or gifts of value provided by third parties which directly benefit the research project. These must be specifically identifiable with the project, well documented, and are subject to audit in the same way as are all funded categories. Most cost sharing is accomplished through the participation of personnel related to the project.

Several faculty members have long standing research awards with sponsors that were negotiated initially with a lower indirect cost rate than the standard rate. In these cases, the Director or Associate Director of the Division of Sponsored Research will work with the funding organization, faculty member/department chair and/cognizant college office and in the interim to identify a source of cost sharing that can be acknowledged in the proposal or a means of reducing the administrative component of the award by, for example, lump sum payments using a short-form letter of agreement. Also, it will be expected that over a reasonable time period, these rates will be increased and brought in line with the prevailing indirect cost rates. An example of this is the Sponsored Program Agreement funding mechanism used by IFAS.

Any modification of the University's indirect cost rate on a proposal or application must be approved by the Director or Associate Director of the Division of Sponsored Research before the proposal/application is submitted, and a request to modify must be agreed to by the relevant college dean. This applies to all awards. The standard University of Florida indirect cost distribution percentages will hold for those awards accompanied by full indirect cost reimbursement. All indirect costs that are waived must be recovered from the 25% share that would normally be distributed to Principal Investigators, Chairmen and Deans before the normal indirect cost earnings distribution will be resumed.

For further information, please contact Dr. Thomas Walsh, Director, Division of Sponsored Research or Ms. Sandra Goldstein, Associate Director, Division of Sponsored Research (392-1582) in the Research & Graduate Programs and/or the appropriate college office