IDC Policy

Facilities and Administrative (Indirect Cost) Rates

What are Facilities and Administration (F&A)/indirect costs?

Facilities and Administration (F&A)/indirect costs (or overhead) represent project expenses that cannot be easily identified with any specific sponsored project but are incurred for common or joint objectives related to all sponsored projects at UC Santa Cruz. For example, it would not be feasible to calculate and charge every sponsored project an exact amount for space and utilities used or for the amount of staff time associated with processing payroll for project employees. Instead the University negotiates F&A rates with the U.S. Department of Human Services, and these rates are charged, as appropriate, to sponsored projects awarded to the University. Please Note: Under federal Uniform Guidance (§200.414 (c)1) the University’s negotiated rates must be accepted by all Federal awarding agencies unless a different rate is required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate.

When is the On-Campus vs. the Off-Campus F&A rate used?

The University does not charge F&A based on the value of the project to Society or how much funding is available for the project from the sponsor. The on-campus F&A rate is always charged when the sponsor allows the University to apply its negotiated on-campus F&A rate unless a vital interest waiver is granted by the VCR or the off-campus F&A rate applies (see below.)

The off-campus F&A rate is used when the project is conducted throughout the project period at facilities not owned or leased by the University. If leased space and leased costs are directly charged to the project the off-campus rate must be used. Donated space in an individual’s private residence cannot be used as off campus facilities without approval from campus Real Estate Services.

If the project is conducted partially on and partially off campus, the University will determine which rate to use based on where the majority of work takes place. The University will look at a combination of factors in making this determination: Santa Cruz personnel effort and/or salary costs; whether the amount of time project activities continuously take place off campus is significant (e.g. longer than one semester or three summer months); and the extent to which university systems, resources, facilities, personnel, and students are being used throughout the project.

Both on-campus and off-campus rates may be used for a given project under certain circumstances. Contact your OSP Contract and Grant Officer for additional guidance.

 

Exceptions to Standard Indirect Cost Recovery

Non-profit Sponsor Policy

The UC Santa Cruz campus grants waivers or reductions of Indirect Cost (IDC) for most individual non-profit agencies that have formal written public policies dictating an IDC rate different from the campus’ federally negotiated campus rates. These waivers are handled by OSP without additional input from the principal investigator (PI).

However, there also are sponsors that do not publicize their policy regarding payment of IDC. Before developing a project budget for such sponsors, OSP will need to obtain written guidance on the sponsor’s IDC policy from an authorized representative of the sponsor. This written documentation must:

  1. Be provided by an authorized representative of the sponsor on sponsor letterhead or via direct email from the sponsor representative to OSP.
  2. Include the specific IDC rate and the base it is based upon. For example, 15% of total direct costs (TDC). Note: If the sponsor provides an IDC range (such as 12% to 15%) the higher percentage always will be applied.

If the sponsor cannot provide either a formal written policy governing IDC or an acceptable written explanation of their IDC policy, the University’s appropriate federally negotiated IDC rate will be applied. If the PI has a compelling reason for asking that the campus’ federally negotiated rate be waived or reduced, the PI will need to request the exception as a Campus Determination Exception.

Under certain circumstances, an exception based on sponsor policy from a for­-profit corporation or other governmental entities may be considered for a legitimate, general University community service, scholars’, or fellowship program. UCSC considers these to be Campus Determination Exceptions and the PI will need to submit a formal request as detailed below.

 

Campus Determination (Previously Vital Interest Exception)

In rare cases exception to UC Policy in IDC recovery may be considered by the Vice Chancellor of Research when the sponsoring entity does not have a documented policy requiring the reductions or is not a non-profit entity. In order for an exception based on Campus Determination to be considered, the PI must submit a formal request, clearly justifying the exception based on one of the following criteria:

  • Small seed grant which may attract future larger awards
  • Case of hardship for a new investigator
  • Award which includes contributions of equipment or building renovation funds
  • Award for a community relations interest vital to the campus
  • Supplement for a student services activity which the campus must provide
  • Supplement for library holdings or public exhibits
  • Contributes significantly to documented divisional or campus priorities

Requests made under these circumstances must be submitted at least two weeks prior to the desired proposal submission date. Proposal budgets based on these requests will not be submitted by OSP until the required campus approvals have been received.

Please use the Indirect Cost Exception request form for campus determination requests. 

 

UCOP Approval Required

UCSC delegation to approve exceptions to UC IDC recovery policy does not include projects funded by Federal or CA State agencies.

 Federal programs which require a reduced IDC rate must meet Uniform Guidance requirements and have OMB approval. In these cases, OSP will work with UCOP to document the approved rate and no formal request is required from the PI.

CA State agencies are subject to the rates established under the California Model Agreement (CMA) between The University of California, California State Universities, and the CA Department of General Services. Special approval is required in order to submit any proposals which deviate from the CMA.

Prior to any proposal submission which deviates from the agreed upon IDC recovery rates established under the CMA, UCSC must provide UCOP with the following: 

Rationale

A request must include a rationale that includes appropriate documentation and responds to the below questions.

Documentation

  • Describe the restriction (both the rate and base).
  • Provide documentation of this restriction, whether a policy document, agency website, or a solicitation.
  • If the agency asserted that there is a statutory or regulatory reason for the limitation of indirect cost recovery, please provide links, citations, or other documentation of the regulatory or statutory reason for this limitation.

Questions

  • How has your campus has sought to apply the appropriate UC Rate for this proposal?
  • What differentiates this project from other projects at your campus to merit exceptional treatment?
  • Has the agency indicated that it would consider use of the UC Rate in the future?

 

Requests made under these circumstances must be submitted at least one month prior to the desired proposal submission date. The PI will need to submit an Indirect Cost Exception request form providing justification at the same level as required for a Campus Determination (see above). If approved by the Vice Chancellor of Research, OSP will prepare and submit a request to UCOP. Proposal budgets based on these requests will not be submitted by OSP until the required internal and UCOP approvals have been received.