08/27/91

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Government, Stanford agree on billing method for current year

STANFORD -- The Office of Naval Research and Stanford University have agreed on the method for billing indirect costs of research in the current fiscal year.

The agreement, signed Wednesday, Aug. 21, converts the 55.5 percent provisional rate for the year to a fixed-with-carryforward rate.

This means that, rather than negotiating further on what rate to use for billing in the fiscal year that ends Saturday, bills will be submitted at the fixed rate of 55.5 percent. That rate was unilaterally imposed by the government in April; the actual rate of reimbursement will be determined later. "Carryforward" is the standard procedure of adding to or subtracting from future years' rates to correct differences between the fixed and actual rates.

Normally, negotiations produce a fixed-with-carryforward rate before the start of a fiscal year. However, this year the process was altered by the review of indirect costs and the government's cancellation of the agreements, known as memoranda of understanding, that had been a basis for determining the indirect costs - such as buildings, utilities, libraries and administration - of supporting research.

Independent consultants are doing new cost studies to document Stanford's costs, which university officials say should result in a rate substantially higher than 55.5 percent.

Negotiations on a rate for the 1991-92 fiscal year, which begins Sept. 1, are expected to begin this fall.

The indirect-cost rate is applied to only part of direct research costs and is affected by the volume of research. So, for the last decade, Stanford's rate has risen but its indirect cost reimbursement has remained almost steady at about 50 cents for each dollar of direct costs. -ts-

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