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.

Sponsored Projects Administration will ensure that all proposals submitted to, and contracts executed with, any sponsoring agency include the appropriate indirect cost recovery. Any deviation from the indirect cost rates described below will require the prior approval of the dean (who may delegate to the appropriate Associate Dean) of the appropriate unit, the Associate Vice President Sponsored Projects Administration (up to $50,000 IDC waiver/grant year), and Senior Vice President for Academic and Faculty Affairs (>$50,000 IDC waiver/grant year).

II. DEFINITIONS

Direct costs are those costs that can be directly allocated to a specific project. Examples of such costs include the salaries and benefits of the faculty and staff working on the project, consumable supplies, service center fees, travel and patient care charges.

Indirect costs (also known as overhead or facilities and administration (F&A costs)) are those costs that cannot be directly allocated to a specific project but are incurred by a project  through general university operations that support the research infrastructure. Examples of these costs include departmental and central administration (payroll, procurement, sponsored projects administration, legal, information technology), utilities, facility maintenance, building and equipment depreciation, shared equipment services,  security, and housekeeping.

III. PROCEDURE

The applicable indirect cost rate is determined by the source of the funds and the type of activity.  Current rates are posted on the Sponsored Projects Administration Website.

A. Federal Sponsored Projects

The indirect cost rates for federal sponsored projects are established through negotiation between the University and the U.S. Department of Health and Human Services. These negotiations are completed every four years and are based on actual indirect costs incurred by the institution in the previous fiscal year. Sponsored Projects Administration and Budget and Accounting prepare the rate proposal in collaboration with a rate consultant. Indirect cost rates are negotiated for both on-campus and off-campus research, as well as instruction and other sponsored activities.

The federal rates are applicable to all sponsored projects for which the ultimate source of funds is the federal government.

In accordance with the University’s rate agreement, for all activities performed in facilities not owned by the University and to which rent is directly allocated to the project(s), the off campus rate will apply. If rent is not applied to the project(s), the on campus rate shall apply. There will not be more than one indirect rate charged to a project. If more than one rate is applicable then the higher rate will apply.

B. Non-Federal Sponsored Projects

Non-federal sponsored projects shall include indirect cost recovery as a percentage of total direct costs consistent with the current university rates.   If the request for proposal or funding opportunity announcement specifies a different indirect cost rate or if the sponsor's rate is otherwise publicly posted then the university will defer to the sponsor’s rate.

C. Request for Waiver of Indirect Costs:

A waiver or reduction of indirect costs may be requested in extraordinary circumstances with adequate justification.  Requests for indirect cost waivers are not intended to take the place of direct financial support by the departments or schools. In most cases, cost-sharing (see HOOP 75, Cost Sharing) may be more appropriate than an indirect cost waiver. Indirect Cost waivers are submitted via the University’s grants and contracts management system during the budget approval process. 

The University will not allow a waiver or reduction of indirect costs if:

• The principal investigator fails to submit the proposal with budget and budget justification to Sponsored Projects Administration for review at least 7 days prior to submitting to the sponsor.
• The sponsor is industry/for-profit.
• The waiver is solely an attempt to increase the competitiveness of a proposal.

 

IV. CONTACTS

• • Sponsored Projects Administration
  • 713-500-3999
  • preaward@uth.tmc.edu
  • http://www.uth.edu/sponsored-projects-administration/

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