We have a division on campus that performs technological services to several outside agencies on a work for hire basis.  These services might be creating on-line training materials, hosting websites, or similar types of projects.  Sometimes the funding agencies are state agencies, sometime local educational agencies, and sometimes for-profit companies.

I believe that we should always charge full facilities and administrative (indirect) costs on these projects, but the division in question argues that we should waive a portion or all of our overhead because we are providing services to state or local educational agencies.  Sometimes they say they want to waive the F&A just to "be more competitive."

Besides the obvious fact that we would be under-recovering our true cost of operation, isn't there a problem with us waiving a portion of our costs and thereby possibly undercutting for-profit firms that might be able to bid on these contracts?

Any advice is welcome.

Beth Seaton
Western Illinois University
309-298-1191

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