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BACKGROUND
Indirect costs are general costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project activity or other institutional activity.
In undertaking any sponsored project, regardless of funding source, the VMRF must recover both direct and indirect costs. When the VMRF assumes stewardship of a sponsored project, it incurs costs in both categories. Should these costs not be recovered as either direct or indirect costs, they must be paid from other VMRF sources. As a result, indirect costs recovery must be included in all proposal applications which solicit federal or nonfederal contract and grant funds. In view of this requirement, informal negotiations conducted between a principal investigator and a prospective contractor or grantor must include, at the onset, a recognition of indirect costs as well as those that are direct.
The rate for reimbursement of indirect costs for basic research is calculated according to the procedures set forth in OMB Circular A-122 and is audited by the federal government. Indirect cost rates are then negotiated and established for certain rate periods for basic research. The VMRF maintains several cost centers for indirect costs based on utilization of VMRF Services, and other sponsored activities.
POLICY
A. Proposals to Federal Agencies
The indirect cost rate is assessed on a Modified Total Direct Cost (MTDC) basis. This means that the negotiated rate for the VMRF is applied to the total direct costs of the project less all costs for equipment.
Indirect cost rates are applicable to all federal agencies but are subject to limitations prescribed by statute or by federal agency administrative regulations which have been acknowledged by the VMRF as being acceptable. Indirect cost rates are negotiated by the VMRF Chief Executive Officer with the cognizant agency, Department of Health and Human Services (DHHS).
B. Proposals to Nonfederal Agencies
Proposals to Nonfederal agencies shall pay the appropriate indirect cost (IDC) based on cost center.
DEFINITIONS
The definitions which follow are provided for the purpose of classifying gifts, contracts, grants and service awards.
A. Gift/Donation
A conveyance or transfer of an asset made gratuitously, without consideration as required in a contract, grant or service award. A Gift and/or Donation is non-restricted for the continued VMRF approved research related activity and contains no contributor reporting requirements.
B. Contract
A written agreement between two or more parties, which sets forth terms, costs, and conditions for delivery of specified services, materials, or equipment by one of the parties to the other party for some return consideration. The contract requirements are normally defined by the sponsor and are often used by the awarding agency as a means of fulfilling its program objectives.
C. Grant
A grant is a simpler form of a contract of bilateral written agreement between two or more parties which obligates the recipient to provide something or to perform a service of more than incidental significance to the grantor. A grant usually provides for reimbursement for specified costs of research.
The award is of a direct assistance nature, usually competitive for the purpose of obtaining support to accomplish a public purpose authorized by governmental statute or by-laws of a private granting agency. The specifics of a project are usually defined by the applicant and approved by the grantor with a resultant award containing more flexible terms and conditions with respect to expenditure of funds.
D. Project Awards
A written agreement between VMRF and an external source containing the special and essential terms and conditions under which items of goods or services are to be furnished by VMRF.
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