Indirect Cost
What are indirect costs?
Indirect costs are expenses not able to be directly allocated to a specific project (i.e., general office supplies, clerical support, facility costs, etc.) The University has a negotiated indirect cost rate agreement with the Office of Naval Research, our cognizant agency, to be applied to all sponsored research budgets. Here is the current Indirect Costs rate agreement.
What items do not incur indirect costs in a proposal budget?
In accordance with OMB Uniform Guidance, indirect is applied to the Modified Total Direct Cost (MTDC) base. MTDC is defined as the total direct costs less equipment that meets or exceeds the University’s threshold, other capital expenditures, tuition remission, rental costs, scholarships and fellowships, participant support costs, and the portion of each sub-grant and subcontract in excess of $25,000. Here are the current Indirect Cost rates.
How do I know when to use the off-campus indirect cost rate?
The off-campus rate is used if more than 50% of the project effort exerted by the project personnel on a specific project is carried out off-campus. A project is considered off-campus adjacent within 50 miles of the Fairfax campus; outside of that it is off-campus remote. During the proposal preparation process the determination will be made through communications between the PI and OSP. Here are the current indirect cost rates.
Do I have to budget the full indirect costs rate that the University is authorized to include?
Indirect costs are real costs and the reimbursement received by the University is used to pay for actual expenses such as buildings, utilities and other research support expenses. Federal sponsors must follow the Uniform Guidance, section 200.414(c). For non-federal sponsors, unless the sponsor has a written policy that limits the amount or percentage of indirect costs that can recovered, the University will propose its applicable federally negotiated rate. If there is a need to request a waiver or reduction in indirect, the PI should follow the Indirect Costs waiver process during the proposal preparation process.
Do federal agencies have to accept our indirect cost rate? Won’t I be more competitive if my indirect rate is reduced?
Under the Uniform guidance, Federal agencies must accept an applicant’s Federal negotiated indirect cost rate agreement unless they meet the terms in 2 CFR 200.414(c) listed below.
Uniform Guidance 2 CFR 200.414(c) Federal Agency Acceptance of Negotiated Indirect Cost Rates. (See also § 200.306.)
(1) Negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section.
(2) The Federal agency must notify OMB of any approved deviations. The recipient or subrecipient may notify OMB of any disputes with Federal agencies regarding the application of a federally negotiated indirect cost rate.
(3) The Federal agency must implement, and make publicly available, the policies, procedures and general decision-making criteria that their programs will follow to seek and justify deviations from negotiated rates.
(4) The Federal agency must include, in the notice of funding opportunity, the policies relating to indirect cost rate reimbursement or cost share as approved under paragraph (e). As appropriate, the Federal agency should incorporate discussion of these policies into its outreach activities with applicants before posting a notice of funding opportunity. See § 200.204.
Federal Agency Acceptance of Negotiated Indirect Cost Rates. (See § 200.306.)
My sponsor won’t pay indirect costs. Am I still able to submit; is there a waiver request process?
For federal Sponsors, unless the sponsor meets the criteria of Uniform Guidance section 200.414(c), the University will propose its applicable federally negotiated rate.
For Non-Federal Sponsors, if the sponsor has a written policy referencing limited or no indirect costs allowable on the budget, GMU is able to proceed, and the PI will not need to request a waiver. If a written policy is not in place, the PI will need to follow GMU’s indirect costs waiver process.
Is there a difference between a sponsor’s indirect rate and a sponsor’s limit on indirect costs?
Yes. We are only required to conform to Sponsor limits on recovery of indirect costs under the funding opportunity or per their organizational policies. We do not have to follow the organization’s own indirect cost rate. Many non-federal Sponsors will have their own organization indirect cost rate. George Mason has our own federally negotiated indirect cost rate agreement (NICRA) recognized under the uniform guidance that we follow unless a non-federal Sponsor’s solicitation or policies specifically limits indirect cost recovery. Federal Sponsors must follow the Uniform Guidance, section 200.414(c).
How are recovered indirect funds used and what types of costs are allowable?
Allocations of recovered indirect costs are required to be spent in support of research activities. This includes salaries and wages paid to those directly engaged in activities specifically undertaken to produce research. There are other costs that may be incurred in support of research.
Can I use the off-campus indirect cost rate if I work off-campus (remote work/alternate worksite/telework)?
No. Remote work locations, alternate worksites, and telework are not considered off campus.
I am applying for renewal (competitive grant). Do I use the original indirect cost rate or the current rate?
The budget should reflect the current indirect rate published at the time of the application.
I am applying for a non-competitive continuation. Do I keep the rates from the original application or change the rates to reflect the current rates?
Once a grant has been awarded, the indirect costs rate remains the same throughout the non-competitive life of the grant.
I am applying for a supplement. What indirect cost rate do I use when calculating the budget?
In most cases you would use the same rate as the main grant unless stipulated by the Sponsor. If the rate used is different from the rate used in the main grant, then the supplement must be set up in a separate fund.
How is the Provost portion of the indirect cost recovery used?
Office of the Provost Indirect Budget Review presentation summarizes the amount of Provost Indirect recovery and describes how the funds are used.
Does a 59.1% overhead mean more than half of my grant goes to indirect costs?
No. Indirect costs are charged as a surcharge on select direct costs, not a fraction of the total grant. In short, the portion that goes to overhead is much lower than this rate implies. For example, for Mason’s indirect rate of 59.1% of modified total direct costs, the most grant funds that can go to overhead are 35%, and if the award has subrecipients, it could be less than that.