The question of Indirect Cost Distribution has been a particularly high
profile issue recently for the general public,  faculty and institutional
administrations, as well as Congress (witness the audits/
misperceptions/turmoil  at Stanford, MIT, etc.)    Large institutions such
as Yale University have not practised a publicly disclosed cost sharing
distribution formula between the Provost, Deans, Chairs, and P.I.'s.   Given
the limitations recently  imposed  maximums of 26.0% for Administrative
costs, along with  changes to reduce the indirect cost  allowables, and cost
shifting  from Direct to Indirect (eg. clerical salaries), most institutions
are finding themselves in deficit dilemmas.    When you add the generally
downward level of funding growth (compared to the 80's) of grants from the
Federal Government, you end up with fewer dollars going in the door for both
direct and indirect costs.

It has been known (and recently re-stated at the joint NCURA Region 1/SRA
Northeast Section meeting this week) that variances among institutions on
their indirect rates reflect only the individual aggressiveness to recover
those rates, but also legitimate differences of cost structures of buildings
and maintenance that should not be assumed to be equal among all
institutions.     Indirect costs are basically borne by facility and
administrative costs which are real (not imaginary), and recovered through
federally audited/ approved reimbursement mechanisms.    Both the public and
faculty at large have developed mis perceptions about the legitimacy of
these expenses, which are often served back in the face of their
administration by faculty who feel another institution's methodology or
experience is the only correct way.  A corollary to this is that the
coexistence of multiple reimbursement formulas gives credence to the "bogus"
nature indirect cost reimbursement.

I think we do a disservice to our faculty when " carrots" of indirect cost
returns to the P.I. are offered as faculty incentives.    Such a notion
carries the underlying assumption, that you can afford to give away this
extra "fat", since this indirect cost business is an artificially created
scheme to  benefit the administration of an institution.    This creates a
sense of distrust between the government, the faculty, the institution and
the general public.  We all know that this area is largely complex and
misunderstood by most individuals, including our own administration who are
not directly involved in the indirect cost calculation/reimbursement
mechanisms.

Certainly there needs to be fair distribution of these costs to pay the
utility bills, maintain the facilities/libraries, etc., as well as for the
administrative support of the departments and central support groups.    At
the same time we should be united in bringing a consistent message that
 indirect costs are true cost reimbursements for real administrative and
facility costs incurred for the sponsorship of research.    With most
institutions facing budget dilemmas/deficits, how can they afford not to use
them for the purposes they were originally intended?

Gary P. Naegel
Administrator, Pharmacology
Yale School of Medicine
333 Cedar Street
New Haven, CT  06520-8066
(203) 785-4373
xxxxxx@yale.edu
 ----------
From: RESADM-L
To: Multiple recipients of list RESADM-L
Subject: I C Recovery
Date: Thursday, May 11, 1995 8:49AM

 At the University of Nevada Las Vegas we have become involved in a
 discussion of how to use the indirect cost recovery. We currently have
 a formula which shares recovery between the PIs, Chairs, Deans, AVP
 Research, Provost and President.

 We are interested in what other institutions do with IC recovery. Does
 any go to physical plant or the business office to offset some of
 those costs? Is there a limit as to how much any individual can
 recover?

 Thanks
 Bob Swanson
 Director Grants and Contracts
 702-895-1153
 702-895-4410 FAX
     xxxxxx@ccmail.nevada.edu