DoD Appropriations Act, 2008 (PL ) Indirect Cost Recovery Limitation on DoD Basic Research

Transcription

1 DoD Appropriations Act, 2008 (PL ) Indirect Cost Recovery Limitation on DoD Basic Research January 10, 2008 Federal Demonstration Partnership Presented by: University Business Affairs, Indirect Cost Branch 1

2 Indirect Cost Recovery Limitation Basic Research Section 8115 of the DoD Appropriations Act, 2008 (P.L ) Notwithstanding any other provisions of law, none of the funds made available in this Act may be used to pay negotiated indirect cost rates on a contract, grant, or cooperative agreement (or similar arrangement) entered into by the DoD and an entity in excess of 35% of the total cost of the contract, grant, or agreement (or similar arrangement): Provided, That this limitation shall apply only to contracts, grants, or cooperative agreements entered into after the date of the enactment of this Act using funds made available in this Act for fiscal year 2008 for basic research. 2

3 Indirect Cost Recovery Limitation Basic Research DoD Guidance Memorandum issued December 1, 2007 Basic Research funds in programs within Budget Activity 1 of Research, Development, Test and Evaluation appropriations aka 6.1 funds 3

4 Indirect Cost Recovery Limitation Basic Research DoD Guidance Memorandum issued December 1, 2007 Restriction applies to all FY 2008 Basic Research appropriations obligated by any award to a non-federal entity or awardee Procurement contract Grant Cooperative agreement Other agreements/transactions 4

5 Indirect Cost Recovery Limitation Basic Research DoD Guidance Memorandum issued December 1, 2007 Limitation applies only to awards at the prime level Limitation does not flow down to subordinate awards (e.g. subcontracts, subawards, etc.) 5

6 Indirect Cost Recovery Limitation Basic Research DoD Guidance Memorandum issued December 1, 2007 Limitation is effective on new awards made on or after November 14, 2007 using DoD FY08 appropriations, Basic Research funds Limitation not applicable to obligations of FY08 funds for awards made before 11/14/07 6

7 Indirect Cost Recovery Limitation Basic Research Applies to New awards issued on/after 11/14/07 Expansions To awards issued before 11/14/07 funded with FY08 appropriations (6.1) Expansion awarded after 11/14/07 Not Applicable to Awards issued before 11/14/07 but incrementally funded with FY08 appropriations (6.1) 7

8 Indirect Cost Recovery Limitation Basic Research DoD Guidance Memorandum issued December 1, 2007 Term or condition requiring compliance with this limitation shall be included in each new award made on or after 11/14/07 8

9 Indirect Cost Recovery Limitation Basic Research Office of Naval Research Grant Term "This grant is funded with Fiscal Year 2008 basic research appropriations and is subject to the reimbursement limit on F&A costs set forth in Section 8115 of the Department of Defense Appropriations Act, 2008 (P.L ). Payment of F&A costs for research with funds obligated by this action may not exceed 35% of the total costs provided under this grant action." 9

10 Indirect Cost Recovery Limitation Basic Research 35% Indirect Cost Limitation 10

11 35% Indirect Cost Limitation Labor* 100,000 30,000 Tuition Remission 0 Equipment 0 Travel* 8,000 Lab Supplies* 2,000 Total Direct Costs 140,000 (*MTDC) 140,000 58% 81,200 Total Cost 221,200 % of Indirect cost to Total? 11

12 35% Indirect Cost Limitation Labor* 100,000 30,000 Tuition Remission 0 Equipment 0 Travel* 8,000 Lab Supplies* 2,000 Total Direct Costs 140,000 (*MTDC) 140,000 58% 81,200 Total Cost 221,200 % of Indirect cost to Total (81,200 / 221,200) 36.71% 12

13 35% Indirect Cost Limitation Budgets that exceed the limitation will need to be adjusted May or may not be a simple process Considerations: Will total funding remain the same? Rebudgeting of indirect cost to direct cost may result in additional unrecovered indirect cost 13

14 35% Indirect Cost Limitation Example: Direct Costs $60,000 Indirect Costs $40,000 Total $100,000 Indirect Costs are 40% of total 35% of total would be $35,000 Difference - $5,000 14

15 35% Indirect Cost Limitation Example: Direct Costs $60,000 Indirect Costs $35,000 Revised Total $ 95,000 35,000 / 95,000 = 37% - YIKES! 15

16 35% Indirect Cost Limitation To adjust for compliance, consider that 35% of = % of total cost direct cost 16

17 35% Indirect Cost Limitation Here s the Math: On a $100,000 award, $35,000 in indirects is the maximum (100,000 x 35%) If $35,000 is the indirect cost, $65,000 is the direct cost ($100,000 $35,000) $35,000 / $65,000 = % 17

18 35% Indirect Cost Limitation Direct Costs Max. Indirect Cost $60,000 x % = $ 32,307 Direct Cost $60,000 Indirect Cost 32,307 Total $92,307 32,307 / 92,307 = 35% 18

19 35% Indirect Cost Limitation Budget Adjustments: What if total available funding is $100,000? Direct Cost $ 60,000 Indirect Cost 32,307 (complies with 35% limitation) subtotal $ 92,307 Additional Funding available 7,693 TOTAL Award Value $100,000 How do you budget the additional $7,693? Very Carefully! Adding direct cost that are fully or partially burden with F&A remember you may impact the 35% indirect cost limitation Adding direct cost that are fully exempt from F&A - doesn t negatively impact 35% limitation 19

20 35% Indirect Cost Limitation FDP Award T&C Rebudgeting Authority Award Term/Condition requires compliance with Indirect Cost recovery limitation Testing for compliance at the end of the award is critical to ensuring compliance! 20

21 Indirect Cost Recovery Limitation Basic Research Questions? 21