8.102B - Indirect Cost Redcuctions and Waivers

UHCC Policy Chapter 8, Business and Finance
UHCC Policy 8.102B, Indirect Cost Reductions and Waivers
Effective Date: June 2007
Prior Dates Amended: April 2018 (recodified)
Responsible Office: Office of the Vice President for Community Colleges
Governing Board of Regents Policy: N/A
Review Date: February 2021

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I. Purpose: 

This policy establishes policy guidelines for indirect cost reductions or waivers and delegates authority for approval of indirect cost reductions or waivers to Community College Chancellors.

II. Definitions: 

  1. Indirect Costs – As described in UH Systemwide Administrative Procedure A8.910, indirect costs are real costs incurred by the UH that are common to all programs but which cannot be precisely assigned and charged to individual programs. Indirect costs are those costs incurred for general administration support and maintenance and include expenditures relating to depreciation and use allowance, operation and maintenance, general administration and general expense, departmental administration expense, sponsored project administration, library expenses, and student administration and services.
  2. As described in UH Systemwide Administrative Procedures A8.927, indirect costs, pursuant to Office of Management and Budget (OMB) Circular A-21, are costs that are incurred for common or joint objectives and which cannot be readily and specifically identified with an individual sponsored project, and instructional activity or any other institutional activity. Services provided by indirect cost activities are essential for the support and operation of research and training programs and they normally include such costs as lighting, air conditioning, janitorial services, grounds and building maintenance services, departmental administration, accounting, purchasing, personnel, student services, sponsored project administration, and library services.
  3. OMB Circular A-21 provides for the recovery of indirect costs incurred in support of research and training programs by the establishment of indirect cost rates which are applied against eligible direct costs charged to extramural awards.
  4. Facilities and Administrative Costs – Facilities and administrative (F&A) costs is the terminology currently used by the Federal government for indirect costs. The definition for F&A costs is synonymous with indirect costs as described above.

III. Executive Policy: 

  1. Responsibilities
    1. The Vice-President for Research and Innovation has delegated the authority to approve indirect cost reductions and waivers for extramural grants to the Vice-President for Community Colleges. The Vice-President for Community Colleges has further delegated this authority to Community College Chancellors.
    2. The Chancellors shall have the responsibility to:
      1. Approve indirect cost reductions or waivers for extramural projects based on a delegation of this authority from the Vice-President of Community Colleges. The delegation to the Chancellor(s) may be revoked at the discretion of the Vice-President.
      2. Ensure that approvals of indirect cost reduction or waiver requests are based on a full justification of why the University should conduct the project at less than full reimbursement, the amount of the waiver, the benefit to be derived by the University as a result of the reduction or waiver, and the ramifications if approval is not granted.
      3. Ensure that all indirect cost reduction or waiver requests are documented using the Indirect Cost Reduction/Waiver Request form (Attachment A) and that approved reductions or waivers are retained in an appropriate file which is available for review or for preparation of reports to UH administrators, the Board of Regents, the Legislature, auditors, or other individuals or organizations as needed.
      4. Ensure that a copy of the sponsoring agency policy limiting or excluding indirect cost or indirect cost reduction or waiver approved by the Chancellor to extramural project is included with proposals submitted to the Office of Research Services.
      5. Where indirect cost reductions or waivers are not granted, ensure that extramural projects provide for full recovery of indirect costs in accordance with UH Systemwide Administrative Procedure A8.927 and current federally approved indirect cost rates unless indirect cost is limited or excluded by statute, regulation, or sponsor policy.
      6. Language in UH Systemwide Administrative Procedure A8.927, Section 5(a)(6) requiring approval of the Office of Research Service Director for indirect cost reductions or waivers is superseded by the delegation of authority from the Vice President for Research to the Vice President for Community Colleges and further delegation to Community College Chancellors.
      7. Approved indirect cost rates for the University:
        1. Current federally approved indirect cost rates are available on the Office of Research Services website at http://www.ors.hawaii.edu/index.php/rates/102-quick-links/rates/97-indir... and http://www.ors.hawaii.edu/files/112210RateAgreement.pdf
        2. Indirect cost limitations for selected sponsoring agencies are available on the Office of Research Services website at http://www.ors.hawaii.edu/index.php/rates/83-quick-links/100-sponsor-specific-rates
        3. Indirect cost limitations for federal pass through awards from the State Department of Health are available on the Office of Research Services website at

V. Contact Information: 

Subject Matter Experts

Office of the Vice President for Community Colleges, telephone number 956-7038 or email at jmorton@hawaii.edu

VI. References: 

  1. This policy implements the following University policies:
    1. Indirect Cost Reduction and Waivers from Vice President for Research James Gaines to Vice President for Community Colleges John Morton, dated April 17, 2006
    2. Indirect Cost Reduction and Waivers from Vice President for Community Colleges John Morton to Chancellors, dated April 28, 2006
    3. UH Systemwide Administrative Procedure A8.910 Procedures for the Preparation and Submission of Proposals to External Sponsors and the Review/Approval Requirements for Sponsored Agreement
    4. UH Systemwide Adminstrative Procedure A8.927 Facilities and Administrative Cost Charges in Contracts and Grants
    5. ORS guideline on use of 8% indirect cost rate for federal training grants http://www.hawaii.edu/ors/documents/memos/8percentmtdc.pdf
    6. Federal Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html

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