Policy Number: 69
Indirect Costs
I. POLICY AND GENERAL STATEMENT
Unless specifically disallowed by a sponsor's written policies, The University of Texas Health Science Center at Houston ("university") must recover all indirect costs on contracts and grants by applying its relevant policies and procedures.
The only office empowered to solicit, negotiate and commit to perform work under a sponsored grant, contract or agreement is the office of the Executive Vice President, Chief Operating and Financial Officer ("EVPCOFO"), or his or her designee. The Office of Sponsored Projects will ensure that all proposals submitted to any sponsoring agency include the appropriate indirect costs. Any deviation from the indirect cost rates described below will require the prior approval of the dean or administrative equivalent of the appropriate unit and the EVPCOFO. All contracts will be comprehensively reviewed prior to finalization in order to ensure recovery of all costs. Exceptions may be made to this with the endorsement of the dean or administrative equivalent of the unit through which the prospective research will be carried out; however, records must be kept of such exceptions.
A portion of indirect costs will be returned to units as part of the annual budget based upon the actual level of indirect costs brought in by a unit. Annual revenue from indirect cost recoveries will be distributed according to the following formula:
- 10 percent infrastructure needs based on annual Facilities Stewardship Plan
- 55 percent schools
- 35 percent university administration
II. DEFINITIONS
Direct costs are those costs that can be directly related to a specific project. Such costs may include the salaries, wages, and benefits of the researchers and support staff, consumable supplies, travel and equipment necessary to carry out the project, patient care charges, and alterations and renovations required by the research.
Indirect costs are those costs that cannot be directly related to a specific project, but are incurred in providing services in an operating environment within which the research project is carried out and on which it relies. Examples of these costs include the following: maintaining and staffing libraries, maintaining buildings and grounds, and providing security and janitorial services and utilities.
III. PROCEDURE
The applicable indirect cost rate is determined by the source of the funds and the type of activity as follows:
A. Private Funding Sources
Many private sponsors set fixed rates at which they will reimburse indirect costs. If a sponsor's written policy does not exclude reimbursing indirect costs, the university will recover a minimum of 30 percent of the total direct costs of the contract or grant for on-campus activities and 24.5 percent of the total direct costs for off-campus activities. The indirect costs associated with all privately sponsored research and Clinical Study Agreements (industry-sponsored drug studies) are recovered in this manner.
The Office of Sponsored Projects groups private fund sources by category and applies the following indirect cost recovery rates:
- Grants from private sources (including those for training or fellowships) - the foundation's prescribed rate or, if there is no prescribed rate, 30 percent of the total direct cost for on-campus activities and 24.5 percent of the total direct costs for off-campus activities
- Contracts/agreements from private sources, including drug studies - 30 percent of the total direct cost for on-campus activities and 24.5 percent of the total direct costs for off-campus activities
- Subcontracts from federal grants or contracts - applicable federal rate
- Scholarships and loans - exempt
- Gifts and endowments - exempt
- Affiliation and program agreements - exempt
- Interagency Cooperation Contracts - 30 percent of the total direct cost (TDC) for on-campus activities and 24.5 percent of the total direct costs (TDC) for off-campus activities
B. Federal Contracts and Grants
The indirect cost rates for federally sponsored projects at all University of Texas institutions are established through negotiation between The University of Texas System ("UT System") Administration, the local component institutions, and the Department of Health and Human Services. These negotiations are based on indirect costs incurred by the institution in the previous fiscal year. The university's financial reporting department prepares and provides the historical data in the form of a proposal and sends it to the UT System Comptroller's Office, which coordinates with all the UT System components in the negotiations. The UT System and the local component institutions will determine the subsequent course of negotiations. The term of the negotiated agreement may be for one or more years. Indirect cost rates are negotiated for both on-campus and off-campus research.
The specific expense categories that make up the overall indirect cost rate are as follows: building use, equipment use, improvement use, operation and maintenance, general administration and general institutional expense, departmental administration, sponsored projects administration, and libraries. The federal rate is applicable to all research grants (not training grants) for which the ultimate source of funds is the federal government. The Office of Sponsored Projects should be contacted for current federal rates.
IV. CONTACTS
| Contact | Telephone | Email/Web Address |
|---|---|---|
| Office of Sponsored Projects | 713-500-3999 |
http://www.uthouston.edu/sponsored-projects/starting/contact.htm |