November 30, 1999 in SBIR/STTR News

NIH and Indirect Cost Rates

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At the NIH there are rules governing your allowable indirect cost rate. First time Phase I applicants are allowed to request an indirect cost rate of up to 40% of all direct costs. If you request an indirect cost rate of 25% or less, however, the rate will be granted without further justification. The NIH does not negotiate indirect costs on Phase I proposals. So if you do not have a previously negotiated rate with the federal government you are limited to 40% of all direct costs.

I always recommend first time Phase I applicants request between 25 and 30% in indirect costs. This will cover your most basic indirect costs such as rent and benefits.

SBIR and STTR Phase II NIH applicants are not limited in the amount of indirect costs they can request. Unless you want to provide extensive justification, however, you are only allowed to request an indirect cost rate of 25% or less. Many first time Phase II applicants have been caught up in months of indirect cost rate negotiations. These occur after the notice of grant award which could be 9 or 10 months after submission. In short you could be waiting for over a year to receive funds.
Well the NIH now allows first time applicants to request an indirect cost rate of up to 40% of all direct costs without further justification. This is good news for newbies. Many companies, however, have indirect cost rates much higher than 40% and may still need to request a higher rate. If you do not have a negotiated F&A rate with the federal government just be forewarned that the negotiation process can be lengthy.
To find out how to estimate your indirect cost rate contact SBIR GA!






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