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ARS Considers Proposal to Charge 10% Overhead Fee on External Funds

Commodity groups write appropriations committee requesting the policy change not be implemented.

USDA's Agricultural Research Service is considering a proposal to charge a 10% overhead fee on most external funds provided to ARS scientists by nonprofit agencies. This proposal will assess overhead fees on grants provided to ARS scientists by state and national checkoff organizations, as well as a number of private nonprofits.

Five commodity groups - the National Association of Wheat Growers, American Malting Barley Association, National Barley Improvement Committee, National Corn Growers Association and National Cotton Council  - requested that the change not take place. The groups wrote to members of the Appropriations committees who provide funding for ARS activities to take appropriation action from allowing the policy from being implemented.

"If implemented, this fee will result in the rescission of many of those projects and undermine collaboration between ARS and the private sector that has taken decades to develop," the groups wrote.

An April 13, 2006, bulletin from USDA to ARS personnel states the policy of ARS as recovering total costs, both direct and indirect program support costs, from external grants provided to agency scientists. ARS administration already deducts 10% from federal appropriations to cover its administrative costs.

Due to a lack of communication with outside funding sources and objections from those who did hear about the fee, implementation for Fiscal Year 2006 has been deferred by ARS. Any fees that were collected thus far in FY2006 are being refunded, but the ARS Administrator's office confirmed verbally on Aug. 4 and again in writing last week that the intent of the agency is to implement the fee sometime in FY2007, which starts Oct. 1, a statement from NAWG says.

A handful of exceptions will apply to the policy: (1) grants that total less than $5,000 over their total life; (2) if Congress prohibits the payment of the fee by the granting (federal) agency; (3) research agreements with specific USDA agencies; and (4) contracts supporting administration of agencies within the Research Education and Economics mission area at USDA.

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