PRINCETON UNIVERSITY    Office of Research and Project Administration

                                                         4 New South Building, Princeton, NJ 08544-0036

 

 

TO:                 PI and Department Managers

 

DATE:             May 9, 2008

 

FROM:           Jeffrey Friedland, Director    

 

SUBJECT:     Department of Defense Indirect Cost Cap

 

All Department of Defense (DoD) award instruments (including prime contracts, prime grants and prime cooperative agreements) that fund basic research received in FY 08 (starting November 17, 2007) may be affected by a new requirement that limits the indirect cost rate to 35% of total costs of a research project. This new requirement does not apply to continuation funding or to subawards.

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 do the following:

 

·         All proposals/awards will include our current negotiated indirect cost rate on all research projects as appropriate.  

 

·         The Sponsored Research Accounting (SRA) office will closely monitor each of these project grants monthly to ascertain whether or not the spending has resulted in exceeding the 35% indirect cost cap.  SRA will provide all affected PIs a monthly spreadsheet which will illustrate year-to-date total spending, year-to-date indirect spending and the indirect spending percentage of the total.  SRA anticipates that due to the normal exclusions from the indirect cost base (tuition, equipment over $5,000, and subcontract amounts over $25,000) most awards will not exceed the 35% cap, but in the event that it is exceeded, the monthly spreadsheet will be helpful for the PI to plan future spending on their project.

 

·         Should there be an instance where the 35% indirect cost cap is exceeded, the PI (in consultation with ORPA) will be required to ask the sponsor’s permission to rebudget the F & A costs in excess of the cap to an allowable direct cost category.  ORPA cautions that PI’s should not expect the DoD to automatically allow the rebudgeting of these funds.  Approval to do so will be required contingent on the award terms and conditions.

 

Princeton’s internal Notice of Award will include a statement that the cap is applicable to the award.

Questions regarding the cap and its application may be addressed to Denise Moody of ORPA (8-7322 or dmoody@princeton.edu) or Rebecca Hunninghake, Director, Sponsored Research Accounting (8-3071 or rhunning@princeton.edu).