Indirect Costs (IDC)

1 UC San Diego has different negotiated indirect cost rates based on the major functions of the university as described in Appendix III to Part 200 - Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs):

• Sponsored Research: all research and development activities that are sponsored by Federal and non-Federal entities that are separately budgeted and accounted for. This includes activities involving the training of individuals in research techniques (research training) where such activities utilize the same facilities as other research and development activities. Research includes basic, applied, developmental, clinical, and other research activity types.
• Instruction: the teaching and training activities of the university established by grant, contract, or cooperative agreement, whether they are offered for credits or on a non-credit basis. This should not be used for research training as defined above.
• Other sponsored activities: programs and projects financed by Federal and non-Federal entities that involve the performance of work other than instruction and organized research. Examples include health service projects, community service programs, or other public service programs or projects.

2 Federal Flow Through is when a Federal Agency is the Prime (Original) Sponsor - this applies to both Sponsored Research and Clinical Trials:

• Federal funding as the prime determines the applicable IDC rate. The federally negotiated rate trumps the rate that would apply to the flow-through entity, including when the flow-through entity is a local or State of California agency. For example, funding that originated from a federal agency and flows through a non-federal sponsor (with a different IDC rate) is still subject to the federally negotiated IDC rate of 58% in FY2022 for work performed on-campus. 

3 UC Policies on Industry Agreements. For more information go to Indirect Costs for Industry in Blink.

4 Industry Funded Clinical Trials Official Announcements:

• Office of the Vice Chancellor for Research and Innovation Announcement 12/13/2023

5 Total Direct Costs (TDC). More information on Direct Costs in Blink.

6 For State of California awards, the rate in effect for the first year of a multi-year project will be the rate used for the entire project in proposed and awarded budgets. If additional funds (not previously appropriated or budgeted) are awarded by a State agency, the proposed budget for these additional funds would use the UC-approved state rate in effect at the time the new budget request is submitted.

• Exception for California Institute of Regenerative Medicine (CIRM):

        The updated CIRM facility rates are as follows:

*Exclude Facilities B(1) if work is being conducted in the Sanford Consortium Building

The IDC is usually capped at 20% for most awards (exceptions include RFA 05-01, 08-03, 08-04, and PA 08-06 – please check the proposal guidelines). IDC applies to the Facilities Costs and Adjusted Project Costs which exclude Equipment, Tuition and Fees, Research Patient Care Costs, and the total cost of each service contract, Subcontract and Consultant agreement in excess of $25,000.

• Exception for California Energy Commission (CEC) Electric Program Investment Charge (EPIC): The University of California (UC) is only approved to use 25% MTDC because the existing negotiated award template between UC and CEC includes a 25% MTDC indirect cost (IDC) rate as a contractual term for the EPIC project. UC is unable to use another IDC rate until an amendment to the award template is negotiated.

7 Modified Total Direct Costs (MTDC) plus exclusion of fuel and MOSA expenses. (SIO)

Uniform Guidance (2 CFR 200) requires that indirect costs be allocated on the basis of modified total direct costs (MTDC).

For sponsored proposals and agreements using the federally negotiated rate, the following budget items are excluded from the MTDC:

• Equipment
  • Tangible personal property with an acquisition cost of $5,000 or more and a useful life of more than one year
• Capital Expenditures
  • Buildings, alterations, renovations, etc.
• Patient Care Costs
• Graduate Student Tuition Remission
• Participant Support Costs
  • Stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) for conferences or training projects.
• Rental Costs of Off-Site Facilities
  • Does not include costs for hotel rooms, equipment, or automobile rental
• Scholarships and Fellowships
  • Financial aid paid directly to university students as stipends or dependency allowances.
• The portion of Outgoing Subawards that exceeds $25,000
  • IDC is assessed only on the first $25,000 for the lifetime of any Outgoing Subaward, regardless of duration; this includes the UC/DOE Laboratories: Lawrence Livermore, Lawrence Berkeley, and Los Alamos National Labs
  • When a grant/contract requires a new fund number, IDC will be re-assessed
  • Exception: the entire amount is excluded for subawards to another UC campus, also called Outgoing Multi-Campus Awards
• Cloud Computing Costs via UCSD Contracts/ ITS/ SDSC
  • Includes: Amazon Web Services, Microsoft Azure through Oracle Procurement
  • Includes SDSC Cloud, Triton Shared Computing Cluster (TSCC), SDSC Project Storage, Sherlock Cloud (effective October 2017) and HPC Cloud (effective June 1, 2023).  Refer to SDSC cloud services:

• • Triton Shared Computing Cluster (TSCC)
  • Cloud Storage and Compute
  • Network File Storage system (NSF)
  • Comvault Backup Storage
  • HPC
    • Account codes assigned to these costs will ensure these charges are exempt from IDC and not included in MTDC on research budgets.
    • See Cloud Computing Services: Exemption from Indirect Costs for more information.

New Resource! List of Buildings (Excel) and their On/Off Campus classification

UCSD Federal Rate Agreement Language on Use of On-Campus and Off-Campus Rates

• Off-Campus Rate: The off-campus rate is applicable to those projects conducted at facilities neither owned nor leased by the University. However, if the project is conducted in leased space (including campus investment properties) and lease costs are directly charged to the project, then the off-campus rate must be used.

• Projects Conducted Entirely On-Campus or Entirely Off-Campus: Projects conducted entirely on-campus or entirely off-campus will be applied the on-campus or off-campus rate respectively (unless approved by a condition noted above).

• Projects Conducted Partially Off-Campus and Partially On-Campus: If the project involves work at both on-campus and off-campus sites, either the on-campus or off-campus rate generally should be applied, consistent with where the majority of the work is to be performed. Salary cost is generally accepted as a measure of work performed in terms of the total project.

• Use of Both On-Campus and Off-Campus Rates: The use of both on-campus and off-campus rates for a given project may be justified if both of the respective rates can clearly be identified with a significant portion of salaries and. wages of the project.  For purposes of this provision, significant is defined as approximately 25% or more of the total costs and a project’s total salary and wage costs exceed $250,000. 

Standard Budget Justification

The budget justification should include the following language concerning indirect costs:

UC San Diego’s indirect costs are calculated based on Modified Total Direct Costs (MTDC) as defined in 2 CFR Part 200.68 using Facilities and Administration (F&A) rates approved by the U.S. Department of Health and Human Services (DHHS).

Rates established by UC San Diego’s F&A rate agreement dated 06/06/2024, and until amended, are as follows:

• July 1, 2022 to June 30, 2023: 58.0%
• July 1, 2023 to June 30, 2024: 58.0%
• July 1, 2024 to June 30, 2025: 59.0%
• July 1, 2025 to June 30, 2026: 59.0%
• July 1, 2026 to June 30, 2027: 60.0%

Detailed Budget Justification

If the sponsor requires a more detailed justification, the following optional language, which includes details of MTDC, subawards, and place of performance, may be used:

UC San Diego’s indirect costs are calculated based on Modified Total Direct Costs (MTDC) as defined in 2 CFR Part 200.68 using Facilities and Administration (F&A) rates approved by the U.S. Department of Health and Human Services (DHHS).

MTDC is comprised of total direct costs less capital equipment, alterations and renovations, patient care costs, off-campus rent, tuition and fee remission, scholarships and fellowships, participant support costs, and that portion of subcontract costs in excess of $25,000. Additionally, the total amount of subawards to other University of California campuses are excluded. This project will be located on-campus.

Rates established by UC San Diego’s F&A rate agreement dated 06/06/2024, and until amended, are as follows:

• July 1, 2022 to June 30, 2023: 58.0%
• July 1, 2023 to June 30, 2024: 58.0%
• July 1, 2024 to June 30, 2025: 59.0%
• July 1, 2025 to June 30, 2026: 59.0%
• July 1, 2026 to June 30, 2027: 60.0%

The Cost of Research

Did you know the IDC collected does not fully cover the true cost of conducting research at UC San Diego? For more information go to the Office of Research and Innovation(ORI) website: research.ucsd.edu.

Resources

Additional information about IDC and F&A:

• Learn how to calculate Direct and Indirect Cost - Blink page.
• Association of American Universities (www.aau.edu) - Costs of Research and resources.
• UC Indirect Cost Recovery (UCOP.edu)
• Contract and Grant Manual - Chapter 8: Indirect Cost (UCOP.edu)
• NIH Video: Dr. Sally Rockey, NIH Deputy Director for Extramural Research, explains indirect costs and how they support research.