NIH Direct Cost Limits When Including Subawards

Most NIH proposals set a specific direct cost limit for the budget of the proposal rather than a total maximum cost limit. This allows USU to prepare a budget up to the maximum direct cost limit and then apply our full federally negotiated F&A rate. Proposals that include subawards can have varying effects on the direct cost calculation depending on the type of subaward. When a proposal includes a subaward from USU to another institution, only the direct costs for that institution count towards the direct costs limit (see example A below for more details). If the proposal includes a third tier subaward, both the direct and indirect costs are included as a direct cost in the budget (see example B below for more details).

Example A

NIH Proposal with a $500,000 direct cost limit. Subaward to University A for $150,000 ($100,000 direct costs and $50,000 indirect costs).

Budget Category	Direct Costs	Indirect Costs	Total Project Costs
Salary	$150,000		$150,000
Fringe Benefits	$50,000		$50,000
Supplies	$50,000		$50,000
Tuition	$25,000		$25,000
Subaward	$100,000	$50,000	$150,000
Equipment	$100,000		$100,000
Travel	$25,000		$25,000
USU Indirect Costs		$138,000	$138,000
Total Costs	$500,000	$188,000	$688,000

Example B

NIH Proposal with a $500,000 direct cost limit. Subaward to University A for $150,000 ($100,000 direct costs and $50,000 indirect costs). University A is also issuing a Third Tier University Z for $50,000 ($40,000 direct costs and $10,000 indirect costs).

Budget Category	Direct Costs	Indirect Costs	Total Project Costs
Salary	$150,000		$150,000
Fringe Benefits	$50,000		$50,000
Supplies	$50,000		$50,000
Tuition	$25,000		$25,000
Subaward	$150,000	$50,000	$200,000
Equipment	$50,000		$50,000
Travel	$25,000		$25,000
USU Indirect Costs		$138,000	$138,000
Total Costs	$500,000	$188,000	$688,000

Kuali does not have an easy way to show the direct costs vs indirect costs when subawards are included in the budget. This worksheet can assist with your calculations to confirm that you have remained within the direct costs limit of a proposal.