DoD IDC Cap

Agreements funded through the recently passed FY08 Department of Defense (DoD) appropriation may be affected by a part of the bill that limits the indirect cost rate to 35% of total costs.   

Below is what you need to know:

• The only awards affected are contracts, grants or cooperative agreements for basic research funded on or after November 17, 2007;  it does not apply to continuation funding added to awards made prior to the FY08 allocation.
• The cap applies only to prime awards; it does not flow down to subrecipients.
• At the proposal stage, budgets should be developed using our federally negotiated rates.
• At the time of the award, sponsors may ask Stanford to provide a revised budget that reflects the cap.  In situations where a revised budget is not requested, Stanford will still be responsible for managing the cap.
• Stanfords internal Notice of Award will include a statement that the cap is applicable to the award.

 The DoD has provided only limited guidance on how to manage the cap during the life of the award.  Until we receive additional guidance, it is our intention to:

• Charge the current negotiated rate (58%) on projects with subawards or other excluded costs where we anticipate that the negotiated rate will result in actual indirect costs below the 35% cap.
• Charge a lower indirect cost rate (53.85%) to projects where the budget shows no costs excluded from the indirect cost rate and the actual work is being done entirely at Stanford.  These awards, if negotiated rates were charged, would be likely to exceed the 35% cap.  (The 35% cap equates to an indirect cost rate of 53.85%.)
• For awards where the cap is exceeded, or where we have applied the lower rate to comply with the cap, the under-recovery of F&A related to these awards will be handled in accordance with standard Stanford policy.

 Questions regarding the cap and its application may be addressed to Mich Pane, Associate Director of the Office of Sponsored Research (michiko@stanford.edu).