Policy

Recovery of Indirect Costs from Research Funding and Consultancy Contracts – Policy

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1. Purpose and Objectives

1.1 The primary objective of this policy is to ensure that research contracts, research grants and consultancy contracts include a provision for indirect cost recovery, granting agency conditions permitting.

1.2 A second objective is to ensure that there is full accountability for decisions taken on pricing of research funding and consultancies.

1.3 The third objective is to encourage researchers to adopt a more commercial approach to negotiating agreements with outside parties.

2. Definitions, Terms, Acronyms

For the purpose of indirect cost recovery, the following definitions apply:

Total Employment Costs include:

  • direct salary costs of staff employed on the project;
  • imputed costs of salaried academic staff for the time they work on the project;
  • salary on-costs, at the prevailing rate set by the Human Resources Division.

All Other Costs include but are not limited to:

  • cost of consumable items;
  • bona fide contracts with unrelated external suppliers of specialist services (note: contracts which are simply labour supply contracts must be included under Total Employment Costs);
  • laboratory and facility rental or usage charges;
  • travel costs;
  • other maintenance costs; and
  • items of equipment purchased;

but do NOT include items which, while being part of the research budget, are not subject to a loading for indirect recovery:

  • costs of using facilities neither owned nor financially supported by the University; and
  • costs of providing support for postgraduate and higher degree by research student thesis projects, including scholarships, stipends, the imputed costs of salaried academic staff for student supervision, and costs directly related to the thesis project and provided that there are no obligations on the student or the University other than to provide progress reports and a copy of the thesis should the student complete the project.

3. Policy Scope/Coverage

This policy applies to all University staff, students and visitors for research contracts, research grants and consultancy contracts managed through the University or by the University’s commercialisation companies. This includes consultancy contracts <=$50,000 that are delegated to Executive Deans and Directors of Institutes for approval.

4. Policy Statement

4.1 Given the Commonwealth Government’s recognition of the indirect cost issue for Australian Competitive Grants through the Sustainable Research Excellence (SRE) program, it follows that research funded from industry and other sources should also include indirect cost budgeting.

4.2 Services and infrastructure costs, commonly referred to as indirect costs, are real costs incurred by the University. If those costs are not recovered through the funding provided by the client, then the project is being subsidised from elsewhere within the University.

4.3 Indirect costs include salaries, salary on-costs, consumables, travel and maintenance together with costs which are incurred by the individual Schools and Centres, Faculties/Institutes and the central University in providing support services and infrastructure.

4.4 The sum of the direct costs and the indirect cost recovery, as outlined in this policy, is the minimum price that should apply to research contracts and grants. This pricing policy does not necessarily recover ALL of the cost of the University’s provision of infrastructure. However, researchers are encouraged wherever possible to seek fully commercial rates, that is, prices in excess of the minimum, as determined by this policy. To this end, researchers should discuss project pricing with their Faculty or Institute Research Partnership Manager, or equivalent, when preparing a budget or discussing pricing with a potential contracting party.

4.5 While recognising the competitive and funding pressures facing researchers, the University is a provider of high quality and high value services and prices should reflect this position. Prices that are at or below cost only serve to devalue these services.

4.6 In these ways it is intended that the University will satisfy its National Competition Policy obligations, will adopt a more transparent methodology for costing, and will obtain the necessary funding to cover the full cost of research and consulting activities.

4.7 Where any part of the project or contract is subcontracted to or is done in collaboration with another research group within the University, the pricing of that part must comply fully with this policy, that is, it must make full provision for indirect cost recovery.

4.8 As a general principle, the indirect cost recovery procedures are applied once only for any part of the work undertaken within a research or consulting project, that is, they are not cumulative.

5. Calculating Indirect Cost Recovery

5.1 Minimum cost recovery

5.1.1 The University will seek to price research contracts and grants so as to recover, as a minimum, all direct costs and indirect costs from project funds.

The indirect cost recovery component on all research funding will be calculated as:

60% of total employment costs (equivalent to using a multiplier of 1.6 x total employment costs)

PLUS

10% of all other costs.

5.1.2 The indirect cost recovery component on all consultancy contracts will be a flat rate of 20% (minimum) (equivalent to using a multiplier of 1.2 x total project costs).

5.2 Prices in excess of the minimum

5.2.1 Where academic organisational Units or University commercialisation companies already specify higher minimum rates of indirect cost recovery than proposed here, the higher rates will remain in force.

5.2.2 Where a researcher or research group negotiates a price for a project in excess of the minimum, the additional funds will be allocated to the research project account.

5.3 Variations to project pricing

5.3.1 Projects funded by schemes listed in the Australian Competitive Grants Register (Category 1 research income) are partially funded for indirect costs through the SRE program and will not generally be subject to any further indirect cost recovery except where the granting body rules allow for such recovery. In this case the project should recover the maximum amount available under the funding rules.

5.3.2 Projects funded by charities or foundations that are registered as charities in their legal jurisdictions will also not generally be subject to any indirect cost recovery except where the granting body rules allow for such recovery, in which case the project should recover the maximum amount available under the rules.

5.3.3 Projects funded by major international competitive schemes (eg NIH, NSF) will be subject to a reduced rate of indirect cost recovery, in accordance with the funding rules of the relevant scheme.

5.3.4 A flat rate of 15% applies to clinical trials that are conducted off site (ie not using UQ facilities).

5.3.5 Other circumstances that MAY justify a reduction in indirect cost recovery include projects that benefit the University in a strategic way and help it meet its mission and goals, for example:

  • the project provides for provision of large-scale, specialised equipment that would remain in the possession of the University at the end of the project and would be fully available to support further research by the University; or
  • the work will be undertaken in research facilities not wholly owned or provided by the University or by staff not solely employed by the University.

All such variations will need to be applied for in writing to the Deputy Vice-Chancellor (Research). In general, this rules out any reduction in the indirect cost recovery rate for work undertaken on behalf of commercial clients.

Custodians
Director, Research Partnerships
Mr Ian Harris

Procedures

Recovery of Indirect Costs from Research Funding and Consultancy Contracts - Procedures

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Body

1. Purpose and Objectives

1.1 The primary objective of this policy is to ensure that research contracts, research grants and consultancy contracts include a provision for indirect cost recovery, granting agency conditions permitting.

1.2 A second objective is to ensure that there is full accountability for decisions taken on pricing of research funding and consultancies.

1.3 The third objective is to encourage researchers to adopt a more commercial approach to negotiating agreements with outside parties.

2. Definitions, Terms, Acronyms

For the purpose of indirect cost recovery, the following definitions apply:

Total Employment Costs include:

  • direct salary costs of staff employed on the project;
  • imputed costs of salaried academic staff for the time they work on the project;
  • salary on-costs, at the prevailing rate set by the Human Resources Division.

All Other Costs include but are not limited to:

  • cost of consumable items;
  • bona fide contracts with unrelated external suppliers of specialist services (note: contracts which are simply labour supply contracts must be included under Total Employment Costs);
  • laboratory and facility rental or usage charges;
  • travel costs;
  • other maintenance costs; and
  • items of equipment purchased;

but do NOT include items which, while being part of the research budget, are not subject to a loading for indirect recovery:

  • costs of using facilities neither owned nor financially supported by the University; and
  • costs of providing support for postgraduate and higher degree by research student thesis projects, including scholarships, stipends, the imputed costs of salaried academic staff for student supervision, and costs directly related to the thesis project and provided that there are no obligations on the student or the University other than to provide progress reports and a copy of the thesis should the student complete the project.

3. Procedure Scope/Coverage

This Procedure applies to all University Staff, Students and Visitors for research contracts, research grants and consultancy contracts managed through the University or by the University’s Commercialisation Companies. This includes consultancy contracts <= $50,000 that are delegated to Executive Deans and Directors of Institutes for approval.

4. Distribution of Indirect Costs Recovered Through Research Funding and Consultancies

For contracts and grants managed through the University, funds recovered for indirect costs will be allocated as follows:

 

Percentage

distribution

Allocation type

Faculty/Institute

 

 

20%

Primary Faculty/Institute allocation

20%

Secondary Faculty/Institute allocation to be distributed in accordance with local priorities and practice (this may include a distribution to the School/Centre/research group where appropriate).

40%

TOTAL

Central University

 

 

 

60%

Research Only - DVC(R) Strategic Funds

60%

TOTAL

5. Operational Procedures

5.1 Budget preparation

5.1.1 All researchers are encouraged to discuss research and consultancy budgets with their Research Partnerships Manager where relevant before committing to a price with a client or sponsor.

5.1.2 Budgets shall be presented in a pro forma layout that includes the indirect costing formula. A printed copy of the pro forma budget must be attached to the research contract when submitted to UQ Research and Innovation for negotiation or signature.

5.1.3 In situations where the primary research group undertaking the research or consultancy is outsourcing some of the work to other research groups at the University, the other research groups must also prepare a pro forma budget so that all indirect costs can be recovered and distributed appropriately. In these situations more than one pro forma budget will be attached to the research agreement or contract.

Where the client or granting body requires a budget to be presented in a different format this should be prepared in addition to the pro forma budget.

The difference between the indirect costs budgeted in accordance with this policy and the actual indirect cost should be highlighted, as appropriate, as an in-kind contribution by the University. The actual indirect cost is the figure derived from the annual Sustainable Research Excellence Transparent Costing exercise ($1.08 2011).

5.2 Approval for variations

Requests for any reduction below the minimum indirect cost recovery rate or the waiving of such costs must be received in writing by the Deputy Vice-Chancellor (Research). Approval must be obtained from the Head of School or Centre, after consulting with the Research Partnerships Manager, (or equivalent) before any request for a waiver is submitted. All requests that have been approved by the Head of School or Centre should be forwarded to the appropriate Research Partnerships Manager who will send them to the Deputy Vice-Chancellor (Research). It is at the discretion of Executive Deans/Institute Directors to determine their involvement in a request for a variation before the Research Partnerships Manager sends the request to the Deputy Vice-Chancellor (Research).

A copy of the written approval from the Deputy Vice-Chancellor (Research) for a reduction in or waiving of indirect costs must be attached to the research contract when submitted to UQ Research and Innovation for negotiation or signature.

In the case of approved reductions of indirect costs, the foregone percentage will be deducted from the Faculty/Institute/School allocation.

UQ R&I will note the indirect cost recovery in the Grant Record Letter and calculate a recovery amount based on the minimum applicable rate where approval has not been obtained by the researcher or research group.

The University will deduct this amount from the project funds.

6. University Commercialisation Companies

6.1 Research Contracts that meet any of the following criteria may be managed by the University commercialisation companies:

6.1.1       Risk 

Projects where negotiations are planned with another party for an agreement that would require UQ to take on non trivial commercial risk or where UQ would be required to grant commercial rights beyond the normal “option to license on normal commercial terms”
 

       Or

      6.1.2.      Project Management

Projects where the University company can add value to the content or process including, for example, large scale multi-party contracts requiring significant project management beyond the capacity of UQ organisational units. (It is recognised that significant project management capacity and expertise is also available in some organisational units within the University (eg SMI) and this capacity should be utilised as appropriate).

       Or

      6.1.3       University Company Initiated

Where tenders or panel contracts are submitted direct to the funding provider by the University company or projects demonstrated to have been initiated and developed by the University company.  This would include research contracted through a UQ start-up company or funding associated with a UQ technology licence.

Research contracts that do not meet any of the above criteria are managed through the University by default, including legal review by Research Legal within UQ R&I.

6.2 Where the research contract is managed by one of the University’s Commercialisation Companies the company may utilise different pricing formulae as appropriate to their business. However, the minimum costing calculation in Section 7.1 still applies.

6.3 For contracts managed through the University commercialisation companies, funds recovered for indirect costs will be allocated as follows:

 

Percentage distribution

Allocation type

Faculty/
Institute

20%

Primary Faculty/Institute allocation

20%

Secondary Faculty/Institute allocation to be distributed in accordance with local priorities and practice (this may include a distribution to the School/Centre/research group where appropriate).

40%

TOTAL

Central University

40%

UniQuest/JKTech allocation

20%

Research Only - DVC(R) Strategic Funds

60%

TOTAL

 

Custodians
Director, Research Partnerships
Mr Ian Harris

Forms

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Research Budget Spreadsheet - Form

Research Budget Spreadsheet - Form

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Description: 

Information on research budget preparation and indirect cost recovery is available from the Research Budget Preparation website and the Indirect Cost Recovery at UQ website.  Please review this information before using the UQ Research Budget Spreadsheet.

To access the spreadsheet you must log in with your UQ username and password.

Custodians
Director, Research Partnerships
Mr Ian Harris
Variation of Indirect Cost (Overheads) Recovery Request - Form

Variation of Indirect Cost (Overheads) Recovery Request - Form

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Description: 

This form should be used when the project team and Research Partnerships Manager believe special circumstances exist for a variation of the standard UQ indirect cost (overheads) recovery rates. In these cases, approval for any variation must be granted by the Office of the DVC(R).

NB: In cases where standard exceptions apply, a variation request is not required. These are outlined on the UQ R&I website at: http://www.uq.edu.au/research/research-management/overheads 

Custodians
Director, Research Partnerships
Mr Ian Harris
Custodians
Director, Research Partnerships
Mr Ian Harris
Custodians
Director, Research Partnerships
Mr Ian Harris