Indirect Cost Rate Change for Commercial/Industry Research Contract Activity Carried Out in Academic/Medical Center Space

Christen Parzych

Please note that, effective November 1, 2023, VUMC will implement a new indirect cost rate (also known as a facilities and administrative [F&A] rate) for commercial/industry research contract activity. This change only impacts projects conducted in academic/medical center space.  

Under the new policy, the IDC reimbursement rate for industry-sponsored research projects carried out in academic/medical center space is the current DHHS on-campus research rate at time of budget negotiation with the industry sponsor:

  • Clinical trials for drugs, vaccines, devices, and all other forms of clinical trial investigation sponsored by industry:

Previous Rate:
35% of Total Direct Costs		No Change to Rate:
35% of Total Direct Costs
  • Other industry-sponsored research projects that are conducted in academic/medical center space:

Previous Rate:
70% of Total Direct Costs

New Rate:
75% of Total Direct Costs
(DHHS Federally
Negotiated Rate)

Implementation is as follows:

  • All agreements subject to the updated IDC policy should utilize these rates effective November 1, 2023.
  • Users should utilize a Total Direct Cost (TDC) methodology when applying these rates.
  • Any contracts currently in negotiation and pending final signatures (i.e., budget has been finalized with the industry partner) and all active commercial/industry contractual agreements budgeted at previous rates are grandfathered in at the originally agreed-upon rates (35%/70%).

Recovery of indirect costs is necessary to support institutional infrastructure and overhead costs related to research. Indirect cost recovery should be included in any project budgets and will be recovered when expenditures are made from contract funds. These rates represent a partial yet substantial component of VUMC’s actual research expense.

As these rates apply for all industry budget development and invoicing activities, please contact the Offices of Contracts Management and/or Finance with any questions or concerns.

*As in the past, all federally sponsored clinical trials (either direct funding or flow-through) must use VUMC’s federally negotiated rate.