The terms your P. I. is ready to accept do indeed make this "none of
your business," who wants to subject their institution's integrity to
such a cavalier approach. The issue is not personal incovenience of
income taxt with holding on a fee and indirect cost rate on available
award reducing the amount of work done, it is the audit and debarment
from federal contracts if intentional denial of obligation for sound
accounting principles is commited. Tell your P. I. more professional
conduct is appropriate, take a pass on the project or get a new P. I.