# Presentation: 429008

## INDIRECT COST RATES		

***WHAT ARE INDIRECT COST RATES????***
*** ******Indirect Cost Pool-How Deep?***
*** ******Indirect Cost Base-How Large?***
***Indirect Cost Rate-How High?****** ***

## AGENDA	

***Who Are We- Indirect Cost Branch***
***Definitions***
***Why Indirect Cost Rates Are Needed; Including An Example ***
***The Negotiation Process; Including How To Start The Process***

## INDIRECT COST BRANCH		

**The Office At NIH With The Responsibility Of Negotiating INDIRECT COST RATES With COMMERCIAL ORGANIZATIONS Receiving Awards (Grants & Contracts) With NIH**
**SBIR & STTR**

## TYPES OF COSTS

**DIRECT COSTS: *****Easily Identified With A Specific Project:******	***
**Direct Salaries & Wages**
**Materials & Supplies**
**Consultants & Subcontracts**

## TYPES OF COSTS

***INDIRECT COSTS: Not Easily Identified With A Specific Project***** **
**Fringe Benefits**
**Overhead**
**G&A**

## FRINGE BENEFITS

***Allowances And Services Provided To Employees***
**Pd Abs (Vacation, Holiday & Sick Leave)**
**Payroll Taxes**
**Pension Plan**
**Group Ins (Health, Life & Disability)**

## OVERHEAD COSTS

***Indirect Costs Relating To The Performance Of A Project***
**Overhead Labor (e.g.; supervision, general meetings)**
**Fringes On Overhead Labor**
**Facility Costs & Depreciation**
**General Lab Supplies**

## G&A COSTS

***Indirect Costs Associated With The Overall Management Of The Company***
**Executive & Administrative Labor**
**Fringe Benefits On G&A Labor**
**Professional Fees (CPA)**
**Office Supplies**

## IDC RATES ARE NEEDED

***To Provide A Uniform Method***
**Funding Indirect Costs**
**Charging  Indirect Costs**
***To Provide An Equitable Allocation Of Indirect Costs Across All Projects***

## INDIRECT COST RATE

***A Method For Allocating Indirect Costs To Projects***
***Ratio Between Indirect Costs (*****Pool)** ***And An Equitable *****Base**

## TYPES OF RATES

***Three Types Of Rates***
**Provisional Rates**
**Based On Projections For Current FY**
**Used For Funding & Charging**
**Final Rates****	**
**Based On Actual Costs**
**Charges Adjusted To Reflect Final Rates**
**Ceiling Rates**
**Final Rates Cannot Exceed**

## INDIRECT COST RATE SYSTEMS

***One Tier System: One Pool***
** ****Fringe Benefits, Overhead & G&A**
***Two Tier System:***** ***** Two Pools - Typically***
**Fringe Benefits**
**Overhead and G&A**

## INDIRECT COST RATE SYSTEMS

***Three Tier System: Three Pools***
**Fringe Benefits**
**Overhead**
**G&A**

## INDIRECT COST RATE

***EXAMPLE COMPUTATION- TWO TIER***
**Fringe Benefit Rate**
**POOL: Pd Abs, Payroll Taxes, Pension & Group Insurance**
**BASE: Total Labor-Direct & Indirect Excluding Pd Abs**
**RATE: POOL Divided By BASE**

## INDIRECT COST RATE

***EXAMPLE-CONTINUED ***
**Indirect Cost Rate**
**POOL: Overhead & G&A Costs**
**BASE: Total Direct Cost Excluding Equipment & Subcontract Costs In Excess Of $25,000 Per Subcontract  Per Fiscal Year**
**RATE: POOL Divided By BASE**

## NEGOTIATION PROCESS

***CONTACT INDIRECT COST BRANCH-RUTH BISHOP:***
**When: Notification Grant/Contract Is Going To Be Awarded**
**How: Via **
**E-Mail: rb17i@nih.gov**
**Fax: 301/402-7180**

## NEGOTIATION PROCESS

**Information Needed:**
**Representative Name & E-Mail Address**
**Company Name & Address**
**Grant/Contract Number**
**Grant/Contract Specialist’s Name**

## NEGOTIATION PROCESS

***Indirect Cost Branch  Requests Indirect Cost Proposal:***
**Letter: Via E-mail**

## NEGOTIATION PROCESS

***Indirect Cost Proposal Submitted ***
***Indirect Cost Branch Reviews Proposal***
***Indirect Cost Branch Follows-up With Questions To Company***

## RATES ARE NEGOTIATED

***POOL:***** We Want POOL SHALLOW; Company Wants POOL DEEP**
***BASE:***** We Want BASE LARGE; Company Wants BASE SMALL**
***RATE:***** We Want RATE LOW; Company Wants RATE HIGH**

## NEGOTIATION PROCESS

***NEGOTIATES RATES WITH COMPANY***
**Typically By Phone**
**Rate Agreement Is Issued Or Rate Memo Is Sent To Grant Specialist**

## FINALLY

***WE ARE DONE!***
***NOW THAT WAS NOT SO BAD!***
***WAS IT?***
***GUESS WHAT?***
*** ******WE ARE GOING TO DO IT AGAIN NEXT YEAR!***