Indirect Cost Reimbursement Policy

Indirect Cost Reimbursement Policy

Abstract:
This policy details compensation for direct and indirect costs on university initiatives.
Effective Date:
12/21/1999
Contacts:
None Assigned
Administrative Category:
Applies To:
Faculty, Staff, Students
Material Original Source:

University of Alabama at Birmingham

INDIRECT COST REIMBURSEMENT POLICY

December 21, 1999

(Replaces policy dated August 5, 1991)

See also the following:

  • Conflicts of Interest Policy
  • Clinical trial agreement policies and procedures.

Introduction

UAB strongly supports the participation of its faculty and staff in the discovery, application, and dissemination of knowledge. The costs of extramurally sponsored teaching, research, and service projects to achieve these ends carried out at UAB and/or by UAB employees include direct, as well as indirect costs. It is, therefore, appropriate for UAB to seek compensation for all such costs in a responsible and equitable manner.

Definitions

For purposes of this policy, the following definitions apply:

The term "indirect costs" is synonymous with the newer designation "facilities and administrative costs" as used in the Office of Management and Budget Circular A-21. In that circular, such costs are defined as costs "that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."

A "clinical trial" is the systematic investigation in a human population of the effects of an experimental drug, treatment regimen, or device for a particular disease or disorder conducted according to a formal protocol. Specific criteria defining clinical trials are included in a separate document available from the Office of the Provost.

Policy Statement

  1. All externally funded projects conducted by UAB shall seek reimbursement of indirect costs at the federally approved rates.
  2. When the sponsor is a legally constituted federal, state, or local government entity or not-for-profit entity such as a foundation or health agency and has a published and uniformly applied policy regarding the payment of indirect costs, UAB will abide by that sponsor's policy. Written evidence of such an agency's indirect cost payment policy must accompany any proposal bearing less than the rates referred to in item 1.
  3. When projects have been negotiated and approved under a fixed price grant or contract, indirect costs will be calculated and applied against expenditures as they occur as well as to any unspent funds remaining in the project accounts at the conclusion of the project. The current negotiated federally approved rates will apply unless the conditions specified in items 2 or 6 are applicable. (For purposes of this policy, "fixed price grants or contracts" are those under the terms of which grant revenue is calculated as a flat rate per unit [for example, per case, per test, per patient] instead of being based on the cost charged to the grant account.)
  4. Depending on where the majority of the work is performed, on-campus or off-campus rates may be applicable. With the exception of clinical trial agreements, projects conducted in their entirety in UAB University Hospital space used for patient care are considered off-campus for the purposes of this policy and for indirect cost calculations. Other projects may qualify for the off-campus rate if 50% or more of the project is conducted using non-UAB buildings and/or equipment.
  5. UAB shall use the negotiated indirect cost reimbursement rates in effect at the time of initial award throughout the life of a project agreement. For this purpose, "life of the project" means each competitive segment of a project. A competitive segment is a period of years approved by the funding agency at the time of the award. For fixed price contracts (as defined in item 3), the indirect cost rate applied during the project will be applied to all remaining funds when the project account is closed.
  6. The UAB clinical trial rate is based on the following components of the indirect cost reimbursement rate that are most closely associated with clinical trial activities: Sponsored Projects Administration, General Administration and General Expenses, Departmental Administration, and Operation and Maintenance Expenses. The current clinical trial rate will be levied on total direct costs. The clinical trial indirect cost will be recovered on each deposit and will not be dependent on expenditures.

If a proposed clinical trial is reclassified as a standard grant or contract because it did not meet the UAB criteria for clinical trials, the appropriate full indirect cost reimbursement rate will apply.

  1. When an itemized budget is requested by a for-profit (industrial) sponsor for a grant or contract proposal, a total cost budget which combines direct and indirect costs should be presented to the sponsor. In such a case, an "internal" budget with itemized direct costs and appropriate designation of indirect costs using the appropriate federally approved rate also must be submitted to the Office of Grants and Contracts Administration. Such grants or contracts will be assessed indirect costs in the same way that other grants and contracts are assessed.
  2. Indirect cost reimbursement revenue will be identified with the primary faculty appointment unit of the grant or contract principal investigator. Any exceptions to this distribution must be documented using the UAB Indirect Cost Revenue Redistribution Agreement form available from the Office of Grants and Contracts Administration.
  3. With the exception of clinical trial agreements, certain items, such as patient care charges including clinical laboratory test charges, shall be excluded from the base for calculation of indirect costs.
  4. Faculty members are not authorized to negotiate indirect cost rates.
  5. Those individuals in the UAB administration who are authorized to commit UAB to project contracts may not sign any grant or contract application unless the indirect cost reimbursement rate is equal to the current federal rate (or the clinical trial rate, if applicable) or unless the condition(s) specified in item 2 above are fulfilled.

Implementation

The Office of the Vice President for Financial Affairs and Administration is responsible for implementation of the financial management aspects of this policy.

The Office of the Provost is responsible for implementation of the grant and contract aspects of this policy and for overall coordination of procedures necessary for implementation.