Through the years Indiana University has recovered its cost for repairs and maintenance agreements on nonfederally purchased equipment as an element of the indirect cost. Repairs and maintenance agreements on federally purchased equipment have been recovered as a direct cost to federal programs.
A substantial amount of the total repair and maintenance agreement cost in departmental budgets is attributable to the research effort and yet through the allocation process only about 15 cents of each dollar spent is recovered through the indirect cost. As equipment becomes more expensive and the repairs and maintenance agreements escalate, the problem compounds itself. It is further aggravated by the fact that the University, through its own resources, is buying increased amounts of equipment that are used totally for research programs.
It would be more equitable to remove the repair and maintenance agreement element from the indirect cost study and allow the charging of this cost to federal and nonfederal sources based on the best estimate of the principal investigator or the department as to how the item was used or will be used in the case of a maintenance agreement. Principal investigators make estimates of the distribution of employees time. Salaries are distributed between accounts based on these estimates. the same rationale should be used to distribute the repair and maintenance agreement cost.
Effective July 1, 1990, we will remove the repair and maintenance agreement element from the University’s indirect cost study and the above method should be used to determine the cost distribution for these items.