1. How to Discuss Indirect Costs with Upper Administration Anne Feuerborn – MAXIMUS Steve Cofield – OHSU Leading Excellence in Research Costing Practices General Conference: 11/2 – 11/4, 2016

2. 2 Who is Upper Administration?  Any stakeholder in the process  VPs and Directors of:  Research  Sponsored Projects Administration  Finance  Budget Office  Particular focus on the VP signing off on the F&A Cost Proposal

3. 3 What we want to accomplish  Communicate why the F&A rate is important: Cost Recovery and Revenue  Identify factors which impact the F&A rates at your institution  Strategize the negotiation of F&A rates  Identify policy impacts on calculating and applying indirect and direct costs

4. 4 Defining the Rate and Process

5. 5 Define the Rate  F&A Rate is a calculation of Real Costs related to Organized Research  (…and other calculated bases)  F&A Rate = Indirect / Direct  Direct = Organized Research  Generally, Externally Sponsored  Separately budgeted and accounted for  Indirect = Any costs allocable to OR

6. 6 Increase the Rate!  Goal: Maximize the rate  Scrub direct costs  Increase overhead identified to OR base  Potentially millions of dollars in recovery for institution  Uniform Guidance governs the process  And thus limits our creativity…

7. 7 The Rate Calculation  Complex calculation  Takes 6 months to 2 years  Requires support of many university offices – HR, Finance, Sponsored  Typically three or more rates negotiated: Instruction, OR, OSA rates

8. 8 Defining the Base  Distinguish which bases/rates are important to your institution  Organized Research, Other Sponsored Activities?  Additional bases, as defined by the institution  Where do you recover the most F&A?

9. 9 Identifying Indirect Costs  Facilities pools  O&M  Building Depreciation  Equipment Depreciation  Interest  Library  Administrative pools @ 26%

10. 10 Factors that impact the Rate Calculation

11. 11 Relating Costs to Research  Strong space survey  Matching occupants and their pay to space  Facilities data  Building meters  Work Order System  Property system  Separate accounting for Research costs  EH&S, Rsch Building Security

12. 12 Cost Trends at your Institution  Sponsored Research  Federal, Private trends  Personnel costs  Energy efficiency vs. Utility rates  Interest rates  Equipment purchased directly off grants?

13. 13 New Investment in Research at your Institution  New Lab Buildings  Are they bonded?  New Plant Facilities  New Library  Any other new investments?

14. 14 Negotiation Strategy

15. 15 Cognizant Agencies  DHHS – CAS  Extensive review of proposal  ONR – DCAA  Full audit  Commonalities  Predictable data requests  Some likelihood to compare to past proposal cost pool/allocation structure  May refer to past proposal issues

16. 16 Review & Negotiation Process  Multiple data requests that take weeks to complete  Larger U’s: likely to have an on-site visit with a space survey review  Usually phone negotiations, potentially various calls and emails  Rate results are generally a few points below proposed rates

17. 17 Past Rate Issues  Review your prior proposal data requests, notes from negotiation  Space survey – addressed any past weaknesses?  Aggressive cost treatments?  Any concerns with data integrity?  Relationship with negotiator – Trust? Contention?

18. 18 Considerations for Negotiations  What were the past negotiation issues? Still a factor?  How long of a rate period to negotiate?  How much of an increase is desired?  Flat rates or stepped rates?

19. 19 Additional F&A rates?  Different location, separate indirect costs  Different recovery, examples:  Agriculture rate – no recovery  Research facility – high % recovery

20. 20 Rate Extensions  Not hitting your ideal rate  Loss of staff in the middle of the process  New system implementations  New buildings coming online soon which will substantially impact the rate

21. 21 Recovery of F&A Costs

22. 22 Effective F&A Rates  Actual revenue generated from F&A/ Direct Cost Base  What are your institutional statistics on rate recovery?  Varies drastically if you look at Federal vs. other sources.

23. 23 Barriers to F&A Recovery  Sponsor caps – USDA, Education, Private Foundations  Decision to waive indirect cost to establish a relationship

24. 24 Direct Charging for Full Cost Recovery  Incentivize faculty to charge salary to the grants  Charging Post Docs, GRA Students to grants  Cost Sharing - per the Uniform Guidance, not required

25. 25 Direct Charging opportunities per UG  Administrative support (where above and beyond)  Computing devices to be treated as supplies  Other items when necessary to complete the award

26. 26 Cost Recovery on Non Federal sources  Charge higher F&A rates to industry  More direct charging opportunities on non-federal grants

27. 27 What can Administration do?  Encourage investment in Research infrastructure  Implement systems and strategies to identify costs to research F&A  Re-evaluate F&A waiver agreements  Encourage and incentivize charging on grants

28. 28 Thank you for Attending! Anne Feuerborn – MAXIMUS annefeuerborn@maximus.com Steve Cofield – Oregon Health Sciences cofields@ohsu.edu