New NIH Policy on Indirect Costs in Proposals including
Consortium Costs
NIH recently announced a revision of its policy on direct cost limitations on solicited AND investigator-initiated applications. Applications in response to those Program Announcements (PAs) and Requests for Applications (RFAs) that include a limitation on direct costs, as well as unsolicited applications that observe the $500K per year maximum on direct costs, are to exclude from that limit the facilities and administrative (F&A) costs requested by consortium participants. The F&A costs requested by the consortium will be reflected in the PHS 398 application according to current instructions, and F&A costs awarded under these programs will continue to be awarded under the current practice. However, these consortium F&A costs will not be counted as a direct cost when determining if an applicant is in compliance with a direct cost limitation on a solicited application.
As stated in NIH's ROADMAP Research Teams of the Future , initiative, NIH recognizes the increased need for support of interdisciplinary research and research teams. Programs that include a limitation on direct costs without the exclusion of consortium F&A costs create a disincentive to the establishment of consortiums, as the inclusion of a consortium's associated F&A costs reduce the amounts which can be requested for other direct costs within a cost ceiling. This change will allow applicants for these programs to propose the necessary research teams via consortium arrangement without a negative impact their ability to fully utilize the direct cost limitations of the solicitation.
This policy impacts eligibility to submit a modular budget. The modular budget format continues to be used for applications requesting $250,000 or less in direct costs per year. However consortium/contractual F&A costs are no longer factored into this direct cost limit. They may be requested in addition to the $250,000.
This is a generally positive change. Besides freeing up the amount of money available that may be budgeted to the lead institution, it also makes budget planning between collaborating institutions much simpler by allowing everyone to estimate at an early stage only the direct costs of their part of the project. PIs are often surprised by how much their institution's overhead adds to the budget. Since overhead will no longer reduce any part of the direct funds available, this is no longer an issue.
The NIH pages of the budget template have been updated to reflect this new budgeting policy.