Keep in mind, as well, that all does not go as planned in research.  If you budget six subs for three years and try to split the IDC evenly, what happens when the research doesn’t work out as planned and your PI decides to terminate two of the subs in year two, and start two new sites, instead?  IDC is an actual cost that is sunk into the work long before you get reimbursed.  It makes sense to recover that cost as quickly as you can.

 

I would suggest that there are less risky, programmatic ways to describe the budget that will be better at slipping you in under the budget cap.  Generally, startup time on a project with six subs will be an issue, anyway.  It would make a certain amount of sense that there would be a 10% lag in initial direct cost spending in such a case.  Also, keep in mind that pre-award spending between years is available on nearly all continuous federal grant projects, even when there is no carryover, so whatever the budget says nominally, the work should be able to continue as it needs to if you run out of funds near the end of the first year (assuming you institution is willing to approve it internally).

 

To me, there are cleaner, simpler, less risky ways to work around this problem than to tinker with a federally negotiated rate agreement.

 

 

 

In the words often attributed to medieval maps, “Here there be dragons.” As I often tell investigators as we’re building a proposal and a budget to match it, attempting to get too creative when it comes to grant guidelines (especially at the federal level) or administrative rules often leads to front-page headlines you don’t want to add to your press clippings file (and sometimes to the wearing of orange jumpsuits).

 

Of all the categories to adjust while trying to get down to or under a budget cap, indirects would be last on my list. There’s just too much fuss and bother. And while an auditor might not care about undercharging on F&A, it’s better than even money that a grants management specialist and/or program officer would. Especially at the feds, the program staff are paying increasingly close attention to burn rates, and people who aren’t spending in the ways they anticipated are often subjected to heightened scrutiny. Do that often enough, and your investigator may find it hard to secure funding from that sponsor on a consistent basis in the long term. The Department of Energy is notorious for this – to the point that you have to jump through hoops with them to be allowed to invoice quarterly when the indirects don’t exactly match up with the directs for some reason (such as buying a piece of equipment, even if the equipment was in the proposed-and-approved budget).

 

In the 13+ years I’ve been in this business, I’ve seen numerous examples, at multiple institutions, of budgets that included subawards that didn’t reach to $25,000 in the first year, and consequently the indirect recovery spanned two or more years until either that threshold was finally reached or the work on the sub was completed and the project was closed out, whichever came first. I’ve never seen an example of a prime recipient voluntarily spreading out the indirects when they could have taken them all in the first year. I can see why doing so might be attractive: given that the reason we can take indirects on the first $25k of a sub is because of all the responsibilities we have for monitoring and oversight of the work the sub is doing, and the need to coordinate with the sub on reporting, etc. Not all of that gets done in the first year, and it would be nice to be able to recoup some of the costs in the out years. But I’d feel a lot more comfortable proposing it if there were a body of examples I could point to that had also gotten clean audits out of it.

 

 

 

Thanks to all who responded about spreading sub IDC across multiple years in a budget. It gives me good food for thought. I like focusing on the “intent” of the UG with regard to IDC generated on Subs, rather than the literal wording “first”.

I cannot imagine an auditor citing us for undercharging on IDC from subs, whereas their concern would more likely be focused on overcharging. To this point, I think my University would be more concerned about the potential of undercharging IDC. For example, if we were to spread the sub IDC charges across three years, rather than charging them against the first $25k of each sub in the first year, and the project was ended after 1 year, we could be at an IDC loss of $52k if $78k was available to charge, assuming we spent our entire first year budget as budgeted.

 

As for consistency of charging, it is definitely easier and more consistent to always charge on the first $25k. However, a truer budget from the direct cost perspective can be proposed if one is allowed to spread the sub IDC across the entire project. Further, we’d still “consistently” be charging IDC on up to $25K for each sub, maintaining the intent of the MTDC allowance for subs.

 

Has anyone approached the UG for clarification on a matter such as this? Feel free to contact me directly if you have successful examples you’re willing to share.

 

Thank you!

 

 

 

This is an interesting discussion and it brought up a question for me.

If you were to spread out the IDC, would you need to do that across all of your awards in order to remain consistent? Isn’t it important to treat like funds the same?

Thanks.

Sarah

 

 

 

 

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