Direct and indirect costs
Allowable direct cost expenses may include administrative costs, but only under two conditions:
- the services, functions, or activities are directly necessary for the conduct of the grant research; and
- these administrative costs have not been included in the calculation of the recipient institution's indirect cost rate agreement approved by the federal government.
In other words, TRDRP policy does not prohibit administrative costs, but is careful to ensure that such costs adequately meet both of the above conditions.
Indirect costs: Non-UC institutions are entitled to full Facilities & Administrative (F&A) cost recovery of the Modified Total Direct Cost base (MTDC); UC institutional F&A is capped at 25% MTDC. Modified Total Direct Costs include salaries and wages, fringe benefits, materials and supplies, services, travel, up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from the modified total direct cost base calculation.
Indirect costs are capped at 8% for Postdoctoral Fellowships, and Cornelius Hopper Diversity Award Supplements at both UC and non-UC institutions.
For non-UC institutions indirect costs are computed on a MTDC basis at the institution's appropriate federally approved Facilities & Administrative (F&A) cost recovery rate. If the institution has an approved rate from the Department of Health and Human Services, it must be used. In the absence of a federally approved rate, an alternative documented F&A rate for the institution may be used. In the absence of any documented F&A rate, one will be negotiated by the University and the recipient organization. Only those provisional or pending increases in F&A rates which are documented prior to execution of the award agreement can be provided for in approved budgets. The maximum indirect costs which TRDRP pays is the lesser of a) the federally approved rate that is current for the budget year, or b) the rate provided for in the approved budget. Under no circumstances will funded projects be supplemented to reflect an unanticipated increase in the F&A rate; nor can funds originally awarded as direct costs be shifted to cover increases in the F&A. If the F&A rate decreases below that provided for in the approved budget, TRDRP will pay overhead at the new, lower rate, starting on the date of change, and will decrease the award to the institution by the difference between the originally requested amount and the amount to be accrued at the new rate.
All equipment costing $5,000 or more per item must be listed in the equipment category and TRDRP's administrative regulations apply to all items in that category. Institutions whose definition of equipment is higher than TRDRP's $5,000, and who have used this definition to negotiate their federal F&A rate, may calculate indirect costs for TRDRP awards based on their equipment definition. For funded non-UC institutions, TRDRP requires a copy of the current indirect cost agreement annually.
Indirect costs on subcontracts: The recipient institution will pay indirect costs to the subcontractor. For non-UC subcontracted partners TRDRP will allow full F&A of the Modified Total Direct Cost (MTDC), and for UC subcontracted partners 25% MTDC, as defined above. If a UC campus is the recipient institution, then F&A costs can be a portion of any subcontracts to non-UC institutions. The amount of the subcontracted partner's F&A costs can be added to the direct costs cap of any award type. Thus, the direct costs portion of the grant to the recipient institution may exceed the award type cap by the amount of the F&A costs to the subcontracted partner's institution.