Indirect Cost Recovery

The following describes the Medical School’s expectations regarding the recovery of indirect costs (also referred to as IDC, F&A, Facility and Administrative, and overhead costs). Note, while the rates below outline what we are willing to accept from sponsors without exception needed, it is also to be used as a guideline on the offer to other entities that you contract. Standard U-M IDC Rates may be found on the ORSP website.

All projects to Federal sponsors are expected to recover the full, federally negotiated rate for the specific type of project. We recognize that specific programs (e.g. K, F, and T activity codes) have a mandated published rate that is applicable to all applicants.

Industry sponsors are expected to follow the same guidelines as Federal sponsors for research. In cases of a published, competitive announcement in which all applicants are held to the same published rate, the Medical School will accept the published rate.

The Medical School will accept a Non-Profit’s standard published rate as long as it is accessible in the terms and conditions, guidelines, and/or entity by-laws. If there is no published rate, it is expected that a minimum rate of 20% will be used. Higher education and academic medical centers are collectively treated as non-profits.

Notes:

1. The Medical School does NOT accept emails, phone calls, letters, or other announcements as indication of a lower than standard rate. In special circumstances, when sponsors are silent on the issue, conversations may be started with the Grant Services & Analysis Office on the appropriateness of using a historical rate prior to budgeting.
2. In cases where the sponsor is silent or clarification on a rate is needed, only the Grant Services & Analysis Office is authorized to engage a sponsor for further information and clarity. This is to ensure consistency of request and interpretation. Please contact the Grant Services & Analysis Office ([email protected]) for assistance.
3. The rate is assumed to be as % of total costs unless the sponsor specifically refers to the rate as “% of direct costs” (on the instructions, form pages, budget, etc). e.g., Sponsor lists maximum costs as $300,000 and states “up to 10% may be used for indirect cost recovery”.  $300,000 * 10% = $30,000 for indirects.

Other Sponsored Activity (class code 31000) and corresponding IDC rate should be used when a faculty member consults for a company through their U-M appointment, or when the U-M is contracted to author a protocol (only).

Clinical Trial Site Activity (class code 31200) applies to human clinical trials where the protocol is owned/authored by the sponsor, and U-M participates as one site (typically) of many. The Indirect Cost Recovery rate for Other Sponsored Activity (OSA) is used for this type of activity for federal and foundations/non-profits. Industry activity is now 35%.

• As clarification under the contract scope of work, if the U-M investigator works with the sponsor on protocol development and has additional responsibilities beyond performing the protocol, the project should be coded as research and use standard research IDC rates.
• If protocol development had been done as an independent contractor under a separate agreement, Clinical Trial Site Activity may still be appropriate for the execution of the clinical trial.

Research Activity (class code 22000, on campus) applies in cases of U-M investigator-initiated interventional clinical trials where the protocol is created and held by U-M. Previously, a reduced Indirect Cost Recovery rate for OSA was accepted. This reduction of IDC was phased out with trials negotiated after 7/1/2026.

The Medical School does waive Indirect Cost Recovery on Phase I SBIR/STTR projects. This is a standard waiver that does not require a waiver request, and is only for Phase I.

Additionally, the Medical School will waive recovery of indirects related to a subcontract if the same award has already been charged for that activity. This is infrequent but may arise when the sponsor changes the award mechanism mid-project.

All decisions on use of non-standard rates will be made in conjunction with the administrative home department.

If the standard expected rate is not used, a waiver should be requested prior to routing a PAF. Please see the Grants Office website for more information or contact [email protected] for additional assistance.