It is vitally important that all research related programmes with industry and other undertakings are appropriately costed. This requirement is necessary for RCSI to comply with the EU Commission’s Framework on State Aid in Research & Development & Innovation 2014/163 (the “RDI Framework”).
When costing a research related programme with industry, the budget must include the all of the direct costs and indirect costs associated with the research programme:
- Direct costs: Direct costs are those that can be identified accurately for a specific research project including, but not limited to, the salaries of staff employed specifically to carry out the research, the cost of materials and consumables for the project, research equipment/infrastructure access charges, project-specific travel or software licences costs, third-party/sub-contract costs and dissemination costs.
- Indirect Costs: Indirect costs are those incurred in the course of a research project but which cannot be attributed specifically or exclusively to the project. Examples of such indirect costs include space, light, heat, maintenance, library services and computer services. Other examples are the indirect administrative support required to run the project, including recruiting staff, professional indemnity insurance, legal costs of generating and negotiating funding, collaborative and IP agreements, procurement costs of purchasing equipment and materials and financial reporting. Indirect costs are also commonly known as overheads.
Fully Funded Collaborative Research where the industry partner or undertaking owns the IP
The Chief Financial Officer (CFO) and the Vice Presidents for Research (VPDOR) groups of the Irish University Association have agreed a new indirect cost rate of 65.7% should be applied to all new fully funded collaborative research projects with industry in situations where the company funding the research project owns all the intellectual property (IP) arising from the project (hereinafter the “New IUA-wide FEC Indirect Rate”).
This New IUA-wide FEC Indirect Rate was based on a three-year sectoral average analysis of all indirect costs not charged directly to a research project including PI time, academic departmental overhead, central administration costs, premises costs etc. By applying a New IUA-wide FEC Indirect Rate, the IUA CFO and VPDOR groups sought to avoid any potential inter-institutional competitive advantages on the basis of cost and ensure that research excellence and infrastructure remains the critical determining factor in attracting commercial research partners.
The New IUA-wide FEC Indirect Rate recognises that charging full economic cost for fully funded collaborative research projects with industry, where the company funding the project owns all the IP arising from the project, is a requirement of EU State Aid Rules and therefore failure to do so represents financial, compliance and reputational risk not only for Irish universities but also for the Exchequer and the Irish research system.
While RCSI is not a member of the IUA, it is appropriate for the reasons outlined above that RCSI applies the New IUA-wide FEC Indirect Rate to all new fully funded collaborative research projects with industry in situations where the company funding the research project owns all the IP arising from the project.
Contract Research or Research Services
If an RCSI researcher is preforming contract research or research services for industry or other undertakings, these services must be priced at the market price for these services.
In situations where the market price is difficult/impossible to determine, the price charged for the contract research programme or research services must:
- Reflect the full costs of the service and includes a margin established by reference to those margins commonly applied by undertakings active in the same sector as the service; or
- Be determined as a result of arm’s length negotiations where RCSI has negotiated to obtain the maximum economic benefit possible when the contract was concluded and at least RCSI’s marginal costs are covered.
In respect of contract research, where the ownership of, or access rights to, IPR remain with RCSI, their market value may be deducted from the price payable for the services concerned.
For further advice and information on how to correct budget your industry engagement, please contact Seamus Browne or Dawn McGlade.