MEMORANDUM

To:       Academic Deans

From:   Lloyd Armstrong, Jr.

Date:   December 19, 2003

Subject:        Guidelines for Allocation of Indirect Costs on
Interdisciplinary Research Between or Among Academic Units

This set of guidelines to facilitate the conduct of interdisciplinary
research among two or more academic units was developed by a decanal
committee chaired by Max Nikias, and has been approved by me.  The charge to
this Committee was to remove real or perceived impediments to interschool
research collaborations caused by the complexity of indirect cost recovery
allocation.

These guidelines, based on the principle "indirects follow directs," provide
a mechanism to be used to distribute indirect costs amongst two or more
participating academic units.  This simple mechanism makes the distribution
of indirect costs transparent to the researchers and deans.  A three-tier
structure describes almost every interdisciplinary project and includes
further guidelines for determining whether a default approach should be used
or whether a tailor-made solution involving deans might be necessary.

Situation One

Grants with an annual funding level below $200K.  All indirect costs will be
allocated according to the projects or tasks describe within the proposal
and will automatically be prorated based on the direct costs for each
particular project or task.  No negotiations between the respective schools
or deans will be necessary.

Situation Two

Grants with an annual funding level between $200K and $1M.  All indirect
costs will be allocated according to the projects or tasks described within
the proposal and will automatically be prorated based on the direct costs
for each particular project or task.  However, if the grant has an
administration component handled by a particular member of the faculty, then
all direct costs associated with the administration of the grant and the
associated indirect costs will remain within that school whose faculty
member serves in the administrative capacity.  Since object codes for
equipment do not create overhead recovery, these expenditures do not require
consideration.  No negotiations between the respective schools or deans will
be necessary.

Situation Three

All grants with annual funding levels exceeding $1M require that the
principal investigators first consult their respective deans to determine an
appropriate agreement for handling the distribution of indirect cost
recover.  Two or more deans may agree to govern indirect cost allocation
using the guidelines described in Situation Two.