We are a subcontractor on an NIH/NHLBI Program Project Grant.  The local
medical university is the prime.  When we originally submitted our proposal
for the five-year project, we included our full indirect costs (at the time
the rate was 55% of Salaries + Fringes).  When NIH funded the project in
Year 1, we received full indirect costs as requested.  When Year 2 rolled
around, our subcontract amendment from the medical university only included
indirect costs on salaries.  At our insistence, the medical university was
able to come up with the full indirect costs owed for Year 2, and we thought
we had the problem solved.  Now Year 3 has rolled around and we have learned
that we are again to be awarded indirect costs based on salaries only.  The
sponsored programs director at the medical university has looked into the
situation and has determined that NIH arbitrarily reduced our indirect costs
from a salary plus fringe base to a salaries only base for Years 2 through
5.  Additionally, indirect costs were arbitrarily reduced or cut entirely
for some other subcontractors on the same program project grant.  The dollar
amount of the difference for our institution is $5,106 over the remaining
three years of the project.  Note also that our budget is primarily for
salaries and fringe benefits with only a few thousand dollars in the supply
line.  Our total for the five year period was proposed at just over $100,000.

Before the medical university approaches NIH about this situation, we would
like to know if anyone else out there, acting either as a prime or
particularly as a subcontractor, has had the NIH arbitrarily cut their
indirect costs without reducing the direct cost budget.  Perhaps I have been
mistaken, but I was under the impression that, of all the federal agencies,
NIH and NSF were the ones that did not quibble over indirect costs and
consistently paid the full rate.  Am I missing something?  Is this something
that we need to question NIH about?

Thanks in advance for the help.

Barbara H. Gray                           Telephone:  803-953-5673
Director of Sponsored Programs            FAX:        803-953-6577
University of Charleston, SC              e-mail:     xxxxxx@cofc.edu
Charleston, South Carolina  29424