Indirect Costs

Indirect costs are sometimes called Facilities and Administrative (F&A) costs, overhead, or research operating costs. The UC Contract and Grant Manual, Chapter 8-100, provides University with General Policy governing indirect costs, defined in the Manual as follows:

Facilities and administrative (F&A) costs are the indirect costs of conducting research, instruction, or other sponsored activities that cannot be easily attributed to a specific sponsored project. When seeking the reimbursement of indirect costs on a sponsored project, the University is recovering for costs already spent to support these activities.

Examples of indirect costs include grant administrative services, lab operations and maintenance, depreciation and debt services taken on for new construction to provide researchers with modern facilities. 

University negotiates F&A rates with the Department of Health and Human Services and these rates are reflected in the federally approved F&A Rate Agreement. The university seeks to apply negotiated F&A rates to all extramurally funded projects.

In a vast majority of awards F&A costs are expressed as a percentage of the direct costs. Depending on the terms and conditions of an agreement, there may be caps that lower the base amount from which the indirect cost is calculated. For federally-sponsored projects, indirect costs are typically determined by applying the indirect rate to the Modified Total Direct Cost (MTDC). All direct salaries and wages, fringe benefits, materials and supplies, services, travel, and expenses up to the first $25,000 of each subgrant or subcontract are included in the modified total direct costs. Modified total direct costs exclude equipment, capital expenditures, charges for patient care, student tuition remission, rental costs of off-site facilities, scholarships and fellowships, as well as the portion of each subgrant and subcontract in excess of $25,000. Special requirements related to F&A are also included in the NIH policy on indirect costs pertaining to Genomic Arrays NOT-OD-10-097 which is effective as of May 13, 2010.

At UCI, expenses exempt from F&A under the modified total direct cost basis are specified under Base Code B. All base codes, and their corresponding object codes exempt from F&A, can be viewed on the F&A Base Codes webpage.

UC policy requires recovery of all costs, direct and indirect, associated with extramurally funded research. Recouping the full, real costs of research is essential to maintaining the operations of a research university.

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