UC Santa Cruz has delegated authority to consider indirect cost (IDC) waivers in certain circumstances that are of demonstrated value to the institution. Principal investigators are not authorized to negotiate with or to accept reduced indirect cost rates from any sponsor. If you are considering preparing a proposal with rates other than UC Santa Cruz’s federally negotiated F&A rate, contact your proposal administrator early.
IDC waivers generally will not be considered for foreign government entities or for-profit entities. Under certain circumstances, an exception based on sponsor policy from a for-profit corporation or a foreign government may be considered for a legitimate, general university community service, scholars’, or fellowship program sponsored by a for-profit corporation. (See UCOP Chapter 8-500 Exceptions to Approved Indirect Cost Rates, 8-560.1 Sponsor Policy)
Non-profit sponsor policy
UC Santa Cruz typically grants indirect cost (IDC) waivers on proposals to individual non-profit agencies with established, publicly-available IDC policies that allow an IDC rate that is less than UC Santa Cruz’s federally negotiated campus rates. These waivers are handled by OSP without additional input from the principal investigator (PI).
Some sponsors do not publicize their IDC policy, or may not have a formally established policy. 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:
- Be provided by an authorized representative of the sponsor on sponsor letterhead or via direct email from the sponsor representative to OSP.
- Include the specific IDC rate and base. (For example, 15% of total direct costs (TDC).) If the sponsor provides a suggested IDC range (such as 12% to 15%) the highest percentage 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 IDC waiver.
Campus IDC waiver
An exception to UC Policy in IDC recovery may be considered by the Vice Chancellor of Research (or designee) when the sponsoring entity does not have a documented policy or is a for-profit entity meeting UCOP criteria. If a sponsor has a documented policy for a rate that is lower than UC Santa Cruz’s negotiated rates, an exception for an alternate rate cannot be requested. In order for an exception to be considered, the PI must submit a formal request, clearly justifying the exception based on one of the following criteria:
- Small seed grant or other award ($30,000 or less) which may attract future awards.
- Proposed scope contributes to vital community relations, student services, or divisional/campus priorities.
- Proposed scope includes contributions of equipment, building renovation funds, or other in-kind support from the sponsor.
UC Santa Cruz’s de minimis waived rate for sponsors who do not have an established rate is 10% MTDC. 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.
Use the Indirect Cost Exception request form for campus IDC waiver requests.
UCOP approval required
UC Santa Cruz is not authorized to waive indirect costs on projects funded by Federal or California 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.
California state agencies are subject to the rates established under the California Model Agreement (CMA) between The University of California, California State Universities, and the California Department of General Services. Special approval is required in order to submit any proposals which deviate from the CMA.
A Special Approval exception must be reviewed by OR and then routed to UCOP for approval prior to any proposal submission. UC Santa Cruz must provide UCOP with the following documentation:
- Rationale that addresses the exceptional nature of the situation to justify the reduction of indirect cost recovery.
- Description of the restriction (both the rate and base).
- Documentation of the restriction from the sponsor (such as a policy document, agency website, solicitation).
- If the sponsor asserts that there is a statutory or regulatory reason for the limitation of indirect cost recovery, provide links, citations, or other documentation of such limitation.
The PI will need to submit an Indirect Cost Exception request providing the above documentation. Requests made under these circumstances must be submitted at least one month prior to the desired proposal submission date. If approved by the Vice Chancellor of Research (or designee), 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.