We have lots of faculty weeping that they cannot "be competitive" if they
charge full F&A..In the first place, if they are doing what I call
"intellectual services", i.e., truly services as opposed to scholarship, we
are endangering our non-profit status to compete with commercial providers
of such services by subsidizing the real cost.

Other arguments and a partial solution are cut and pasted from an e-mail I
just sent this afternoon.

Indirect costs are REAL.  VCU actually pays them -- pays more for them than
the feds allow us to put into our rate!  So, if we undertake a project at
less than full indirect, VCU is subsidizing that project!  Is that
fair?  For example, if we subsidize a project undertaken for a commercial
organization, aren't we using state money to subsidize private profit?  If
we subsidize a state agency project, aren't we just shifting unstated costs
from that agency to VCU -- and remember, the VCU budget is balanced by
tuition and fees, so it can be argued that our students are paying other
state agencies' costs.

However, the practical solution is just DO NOT SHOW TO A CLIENT A BUDGET
WHICH IDENTIFIES F&A SEPARATELY!  Best technique is the same one a Saturn
dealer uses: state your bottom line price and don't waiver unless the scope
of work changes.

Next best is to show them a loaded budget.  Here's how:
On OSPA's website, at
http://views.vcu.edu/ospa/budgetsheet.htm
scroll down to the bottom.  You will find "loaded" budget
spreadsheets.  Use them -- for lots of good reasons.
1)      We have tested them and trust them.  If you use it, and provide a
copy with the proposal, we do not have to double check your figures, a nice
time saver.  And, if you have any confusion regarding the rates and bases,
the formulae are already built in!
2)      This "loaded" budget calculates benefits and F&A and "loads" them
on a line by line basis, so neither is separated out for someone to identify.
3)      There are TWO SHEETS.  Check the tabs at the bottom.  Sheet 2 shows
line item totals (loaded) for each year.  THE SECOND SHEET IS THE BUDGET TO
PRESENT THE CLIENT!!!
4)      Note that the rates and factors are at the top left on each
spreadsheet.  They are set at the current year's rates for on campus
research.  However, they can be changed..  For example much of Dr. XXX's
activity is off campus instruction; just insert 18.7% in place of 45%.

Using this tool will make it much easier to comply with VCU's policies on F&A.

I encourage you to resist requests to grant wholesale F&A waivers.  Due to
management change, we are now aggressively resisting them.  One thing we
are doing is to create agreements whereby rates will increase over time  --
relatively short time, too! -- to the appropriate rate.

Good luck in plugging the hole in the dike!!

Chuck

At 12:08 PM 4/6/01 -0400, you wrote:
>We have just switched to school-based budgeting which means, in part, that
>deans have the authority to forgive part of the IDC that a grantor is
>unwilling to pay. Faculty are concerned that this will have a chilling
>effect on their attepts to get support because the deans will be very
>sensitive to their bottom line. That may very well be true until we have a
>couple yrs. experience with school-based budgeting under our belt.
>
>I don't have to tell you all  that, by that time, government and private
>funding will be even more difficult to get. Last week someone mentioned
>that the IDC gap might be closed by folks giving up their rights to return
>IDC $s that they would have otherwise gotten. That was very helpful but I
>think that I am going to need multiple strategies.
>
>One I've been considering is asking administration to allow faculty to
>charge what the market will bear for their services, when they can, but
>have them the calculate IDC on the current formula which uses their actual
>faculty salaries as the base for the IDC (our IDC base is salaries and
>wages). What do you think?
>
>Also, do any of your institutions make allowance for the fact  that the
>private sector virtually never accepts the federally negotiated IDC rate?
>Are your schools and departments charged that same fed IDC rate for their
>normal operations or a lower one?
>
>Any other ideas?
>
>Any feed back would be appreciated.
>
>John Cosgrove
>
>
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Herbert B. Chermside, CRA
Director, Sponsored Programs Administration
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
Express Delivery Only:
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 Richmond, VA  23219
Voice:  804-828-6772
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http://views.vcu.edu/ospa/

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