I agree with Doug Wilkerson, and at Duke our policy is to start by charging all

sponsors our full negotiated rate.  We only agree to reduce the IDC for sponsors

who have a lower published rate which applies to all grantees (usually
foundations).  The medical center does use a reduced rate (25%) for clinical
trials only, and I believe the justification is similar to MCO's below.

I feel certain that industry overheads are much higher than university's rates
and that when corporate personnel argue otherwise that it is simply a
negotiating tactic.  They are getting the work done more inexpensively at a
university than they can do it themselves, not to mention that the university is

where the expertise is.

Susan Alberts
Duke University
Office of Research Support

______________________________ Reply Separator _________________________________

Subject: Re: Indirect Cost Policy for non-federal funding sources
Author:  xxxxxx@GEMINI.MCO.EDU at Internet
Date:    12/27/95 8:19 AM

If you charge lower IDC rates to for-profit (industrial) sponsors, how do
you justify that with the A-21 statement that "...each institution's
indirect cost rate process must be appropriately designed to ensure that
federal sponsors do not in any way subsidize the indirect costs of other
sponsors, specifically activities sponsored by industry and foreign
governments" [G.1.a.(3)]?  Granted, most of us charge lower rates for
clinical trials, but we justify it by saying that they are "testing" not
research - at least that's what we say to DHHS.  What we would say to
the IRS would probably be a little different.
 I must admit that we are currently struggling with the same issues
with regard to industry-sponsored basic research.  How do you, on the one hand,

meet your responsibility to the feds, but on the other hand stay competitive
with for-profit sponsors?  Frankly, I suspect that even if everyone charged
for-profits their full federal IDC rate, the research could still be done
more cheaply in university labs than in company labs, they just do not want
to admit it.

Doug Wilkerson, Ph.D.           VOICE:  (419) 381-4252
Assoc. V.P. for Research        FAX:    (419) 381-4262
Professor of Pharmacology       e-mail: xxxxxx@GEMINI.MCO.EDU
Medical College of Ohio
3000 Arlington Ave.
Toledo, OH 43614