Indirect Costs

Background

On April 24, 2026, the University of California and the United States Department of Health and Human Services (the responsible Federal audit agency) entered into a new indirect cost and fringe benefit rate agreement for UCLA. In addition to restating the indirect cost rates for the period July 1, 2019, through June 30, 2025 (agreed to in the March 28, 2023 agreement), it also adds fringe benefit rates for the periods FY26 and FY27. The April 24, 2026 agreement supersedes the April 22, 2026 agreement.

These indirect cost rates are applied to a Modified Total Direct Cost (MTDC) base. MTDC consists of all salaries and wages, fringe benefits, materials and supplies, services, travel and the first $25,000 of each subaward (subgrant and subcontract) regardless of the period covered by the subgrant or subcontract. Equipment (defined as a tangible item with a useful life of at least one year and an acquisition cost of $5,000¹ or more per unit), alterations and renovations, charges for patient care, student tuition remission, space rental costs, scholarships and fellowships, as well as the portion of each subaward in excess of $25,000 are excluded from the MTDC calculation. Please note that if the subaward is issued to another UC campus, the full amount of the subaward is excluded from the MTDC calculation.

Although negotiated with the federal government, these rates should be used in all contract, grant and subcontract proposals submitted to all extramural sponsors. Exceptions to the federal negotiated indirect cost rates have been approved by UCOP for certain non-profit organizations. Please consult with the OCGA representative for your department for details.

Industry-funded clinical trials that meet the campus definition for clinical trials qualify for the application of a special 33% indirect cost rate.  Questions related to Industry sponsored clinical trials, including applicable rates, should be directed to  clinicaltrials@mednet.ucla.edu

The on-campus rate should be used for all research conducted in buildings owned by or leased by The Regents of the University of California. The off-campus rate should be used only when work is either done at facilities owned or leased by other organizations, or in a building for which rent is being directly charged to the project.

If a project involves work at on-campus and off-campus sites, a single rate should generally be applied. That rate, either the on or off-campus rate consistent with the location where the majority of the salary costs are expended. The use of both on-campus and off-campus rates for a given project may be justified only if the following criteria are met:

• The salaries paid to UCLA employees under the project exceed $250,000; and
• At least 25% or more of the total costs can be clearly identified with each rate

If a project involves more than one type of work (e.g., both research and training), a single rate must be applied, reflective of the type of work that makes up the majority of the project.

Note:(1) Equipment is defined as an individual item that costs at least $5,000 and has a life expectancy of more than one year. Items that cost less than the $5,000 threshold or that will be consumed quickly are considered as supply items. These items that cost under $5,000 will have indirect costs assessed.