Research Administration Office

University of California

Memo Operating Guidance

No. 84-9

Supplement 1

June 21, 1984

Subject: Indirect Cost Rate Negotiation Agreements for Each Campus--Inclusion of Human Subject Fees in Modified Total Direct Cost Base

Enclosed is a copy of correspondence with the Department of Health and Human Services confirming that human subject fees should be included in the Modified Total Direct Cost Base for purposes of calculating appropriate indirect costs. For further information, refer to Contract and Grant Memo No. 84-9, dated March 30, 1984, Subject: Indirect Cost Rate Negotiation Agreements for Each Campus. Section I, Rates, of the Rate Agreement specifies the Modified Total Direct Costs Base to which the indirect cost rates apply. Please file this Supplement I with Contract and Grant Memo 84-9.

Refer: Barbara Yoder

(415) 642-3045

8-582-3045

Subject Index: 08, 18

Organization Index: U-115

David F. Mears

University Contracts and Grants Coordinator

Enclosure

cc:

Chancellors

Vice Chancellor-Research

Laboratory Contracts and Grants Officers

Accounting Officers

Internal Auditors

Senior Vice President Frazer

Vice President Baker

Major DOE Lab Associate Directors for Administration


UNIVERSITY OF CALIFORNIA SYSTEMWIDE ADMINISTRATION

March 27, 1984

Mr. Gary Logsdon, Senior Negotiator

Division of Cost Allocation

Department of Health and Human Services

50 United Nations Plaza

San Francisco, CA 94102

Dear Mr. Logsdon:

It was recently brought to my attention that Ms. Carole Tully, grants management specialist for the National Institute of Alcohol Abuse, has questioned whether or not indirect costs are applicable to human subject fees. These fees, as I understand them, are monies paid to human subjects for their continued participation in and commitment to the completion of the research project. They are not patient care costs.

I believe indirect cost apply to these fees for the following reasons:

1) They were included the base when the rate was calculated. To exclude them from the application of the rate would be a change in procedures not anticipated in the negotiation agreement;

2) They are equivalent to services. Premature withdrawal from the project would prevent the successful completion of the research; and

3) They are not paid through the hospital, as are patient care costs; therefore, no other indirect costs have been associated with the human subject fees.

Would you please indicate your concurrence with the above by signing the original of this letter and returning it to me. I will distribute your response to the campus Contract and Grant Officers to minimize the administrative problems associated with this question.

Concurrence by:

Gary B. Logsdon

(Type name) on behalf of the Department of Health and Human Services

cc: Vice President Brady

University Controller Pastrone

Stephen E. Selby

Director

Financial Analysis Office