THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL
Associate Vice Chancellor  for Finance	CB# 1000, 304 South Building The University of North Carolina at Chapel Hill Chapel Hill, NC 27599- 1000

MEMORANDUM

The U.S. Department of Health & Human Services (HHS) has recently approved new indirect cost rates for use by this institution on grants, Contracts, and cooperative agreements. The following approved Modified Total Direct Cost (14TDC) rates have been negotiated for the three-year period July 1, 1999 through June 30, 2002:

Please Note: The research indirect cost rates effective FY 2000-2001 and FY 2001-2002 reflect increases over the current fiscal year's rate.

Office of Management and Budget (OMB) Circular A-21 requires that all indirect cost rates be based on MTDC. According to the Circular, MTDC consists of "salaries and wages, fringe benefits, materials and supplies, services travel, and individual sub-grants and sub-contracts up to $25,000 each."

Stated another way, MTDC represents total direct costs excluding student aid (non-service awards, object 6500), capital outlay (equipment~ renovations and alterations), and that portion of individual sub- grant or sub-contract costs in excess of $25,000.

Off-campus rates apply only to those projects physically housed, supported, and conducted in off- campus facilities. Off-campus seminars, brief training courses, or similar activities associated with a campus based project do not fall within the scope of the off-campus classification. With regard to space rental and use of off-campus rates within the Chapel Hill area, please refer to DDD Memorandum #467 dated August 20, 1980, excerpts of which are included in the Contracts and Grants Procedures Statement #1 in the University Business. Manual.

Applicable indirect costs should be included in all proposals or contractual agreements at the specified rates except in those cases where published and uniformly applied sponsor limitations thereon have been officially recognized and accepted by the University or where indirect costs waivers have been specifically requested. Such limitations and waivers must be unequivocally justified by an identifiable benefit, and approved through the Office of Contracts and Grants in advance of proposing or otherwise entering into any preliminary financial commitments or contractual arrangements with a potential sponsor.

The Office of Contracts and Grants is charged with monitoring compliance with University indirect cost policies. Therefore, should you have any questions concerning the applicability of indirect cost reimbursement rates or the determination of MTDC, please contact Mr. Kent Walker, Chief Contract Administrator at 962-1353 or Mr. John Case, the new Executive Director of Contracts & Grants at 966- 2542 (beginning April 6).