Research Councils
Research Councils will only accept applications that have been prepared on a fEC basis. They will pay 80% towards the fEC of the project. The remaining 20% is assumed to be funded by HEFCE QR resources. This is the operation of the Government's 'Dual Support' system of Public funding of research in Universities.
There will be special treatment in relation to Large Equipment purchases and Project Studentships. For research grants where the total value of the equipment requested exceeds £10K (including VAT), Research Councils will only pay 50% of the equipment costs above this threshold. For equipment above £113,057 (excluding VAT) the Research Councils will potentially fund up to 100% of the cost of the equipment.
Project Studentships will also be treated as an Exceptional Item and Research Councils will continue to fund 100% of the Student Fee and Maintenance (Stipend) costs.
IMPORTANT -Feedback from Research Councils on fEC Applications
UK Charities
Usually, Charities have their own rules that specify the costs they are prepared to fund, which fall well short of the full economic cost. In a lot of cases they specify the 'eligible additional costs' that they will be prepared to fund and a lot of the time they will not pay anything towards the overhead costs or investigator salary costs of the projects they fund. As such, these projects are effectively being supported by the QR Resource mentioned above. From 06-07 HEFCE will tell each University how much of their QR resource is intended to support charitable research.
HEFCE has recently announced the creation of a new support element for research funded by charities within the block grant that HEFCE pay Universities. HEFCE has created this new funding stream specifically to support those research projects carried out by Universities on behalf of charities that do not cover their full costs.
Charities play an important role in UK research. The goal of the research charities is clearly to generate knowledge that will benefit the public. They thus provide an independent stream of research funding which complements that of the Research Councils and NHS. In addition, charities are likely to plough any benefits from intellectual property back into further research.
In principle, this means that charity funding of research should also be eligible for support from QR. However, in practice there are hundreds of research funding charities, with a wide range of aims, and each case will need to be determined on its merits, taking account of the principles for the public funding of research:
- Research should demonstrably contribute to the enhancement of the UK research base.
- The funder has a published research strategy which takes into account the strategies of other major stakeholders in the research base.
- Research supported is of the highest quality.
- Peer review process to asses quality.
Charities usually provide funding for the additional costs incurred specifically for a research project e.g., Research Fellow, Travel, Consumables. As stated above, they rarely fund the cost of Principal Investigators or provide for Indirect Costs. They may be willing to pay for the cost of pool technicians or research facilities but the need for these resources has to be justified.
Other Government Departments (OGD's)
OGDs are major users of the University research base. OGDs are also concerned with short-term policy agendas and the research they commission is often to procure evidence to inform policy-making, rather than to enhance the University research base.
Therefore, the majority of research projects undertaken on behalf of OGDs should be at market based prices, at or above fEC. This is particularly the case where the OGD openly invites tenders in a competitive situation.
Sometimes, OGDs may issue research themes for which they are willing to fund desirable research projects. In these situations they will make a call for research projects and award grants to the projects they select.
Where OGDs provide funding in a situation that isn't openly competitive, they may ask for bids to be presented on the basis of cost, not market price. They may also be unwilling to fund them at 100% of fEC. In these situations, the Budget Centre will have to consider the principles described under Public Funding of Research (see above).
Industrial Funders
Research carried out for Industry tends to be focused on short-term aims/needs with funders usually expecting outcomes and outputs to have an immediate impact. Like OGDs, the majority of research projects undertaken on behalf of Industrial funders should also be at market based prices, at or above fEC.
The price for work carried out for non-public bodies should be market-based i.e. the price is based upon the perceived value of the work to the funder. We should not therefore be disclosing a breakdown of our costs to these funders. This sounds simple in theory, but may be difficult in practice as it requires a good knowledge of the market you are in. However, the simple rules to apply should be that prices should not be agreed prior to calculating the fEC and that the price should always at least equal the fEC.
Another critical factor to consider in dealing with commercial research is the ownership rights and value of any potential Intellectual Property (IP) arising from the research. In order to assist staff in considering these factors, the University has a dedicated technology transfer and exploitation company, Alta Innovations Ltd who specialise in the identification, protection and commercialisation of University-derived intellectual property (IP).
European Union (EU)
The EU requires different costing and verification procedures as a basis for their funding (including time sheets). The methodology adopted for calculating fEC will not produce a cost-based price acceptable to EU Framework or ESF projects. There is national discussion and debate ongoing with the EU concerning a move towards fEC, but this is unlikely to be resolved very quickly.
For EU 6th Framework Programme (FP6) projects, like most UK Universities, we have chosen to adopt the Additional Cost (AC) model. Under this model, the EU will reimburse 100% of most additional costs, plus pay a flat-rate of 20% of these costs to cover Indirect Costs. Additional Costs can't include core staff (e.g., investigators) but can include Fixed Term Staff appointed specifically for the project (e.g., Research Fellows/Assistants).
For EU 7th Framework Programme (FP7) projects, like most UK Universities, we have to adopt the Flat Rate Overheads model. Under this model, the Full Cost of the projects is calculated as additional costs, plus a flat rate of 60% of these costs for Indirect Costs. The EU will pay 75% of the total Full Costs of the projects.
For more detailed advice and support, please contact the EU Accounting Team.
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