While the amount of money required to complete the project is referred to as direct costs, the overhead expenditures incurred by Western are referred to as indirect costs. Indirect costs, what the OMB refers to as Facilities and Administrative costs, are added to the total budget amount in order to compensate the institution for general operating expenditures (i.e., accounting, facility maintenance, and administrative services). This rate is approved by the Department of Health and Human Services, and cannot be negotiated by the PI/PD. Western currently utilizes the simplified procedure for small institutions, which looks at the ratio of total salaries and wages paid to all employees to the amount of facilities and administrative costs that are categorized as follows: general administration and general expenses, operation and maintenance of physical plant, library, and department administration expenses. The indirect fees added to outgoing proposals should be calculated as a percent of base salaries and wages. The fringe benefit amount is not to be included in your calculation of indirect fees. Contact the Grants Officer for the current rate. Most federal and state granting agencies permit inclusion of indirect expenses in the budget, while private foundations often do not. Whether or not your prospective funding agent permits this allowance is usually outlined within the agency funding policies available via the agency website. It is the policy of Missouri Western State University to recover all allowable indirect costs for sponsored programs. All Federal agencies are obligated by law to recognize an institution’s full-audited rates. In some situations, however, the agency may recognize the full rate but allow only partial recovery. If the indirect costs are not recovered, they are contributed as formal or informal cost sharing, whether cost sharing is required by the program or not.