Indirect Cost Proposal Ramps Up

by Ed Love

In fiscal year 2003, the University of Washington received $932,924,804 in grant dollars. In fact, the past 20 years have shown a steady increase in research funded by both federal and nonfederal agencies.  

Management Accounting and Analysis (MAA) is preparing the UW Facilities and Administrative (F&A) proposal, otherwise known as the indirect cost proposal. This proposal determines the amount of money the UW receives to cover its indirect costs. Indirect costs are costs that cannot be directly associated with a particular grant. The indirect cost rate currently is 51.6%; that means that for every $1 a sponsor gives for research, the UW receives another 51.6¢ to cover expenses such as rent, electricity, and even some FM employee salaries.  

Funds received as a result of indirect costs play a very important part in many departments within FM. The revenue brought in from indirect costs subsidizes central research offices like Payroll and Payables Administration. The higher the negotiated indirect cost rate, the more money can be allocated to offices that support the research infrastructure.  
The current proposal uses expenditure, equipment, capital project, payroll, and space data from fiscal year 2003. Extensive assistance from academic units is required to classify costs and assign functions to the space so that indirect costs can be allocated and the indirect costs of research can be determined. MAA uses specialized software, called the Comprehensive Rate Information System (CRIS) to calculate the University’s F&A rates and prepare the rate proposal documents. The last F&A proposal was performed in 1995, but with the advent of this software, the time that elapses between proposals will decrease.  

The UW’s F&A proposal will be submitted by June 30, 2004, to the Department of Health and Human Services (DHHS) in San Francisco. DHHS is the University’s “cognizant” agency which means it provides more than 50% of the federal research dollars that the University receives. After DHHS reviews the information submitted by MAA, representatives will visit campus to verify the data provided in the proposal. This part of the DHHS review takes from six to twelve months. After the review, MAA will negotiate the final F&A rates with DHHS. The negotiations should be completed by 2005.  

Wish MAA luck as it enters the home stretch!