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“$400,000 – that’s on every proposal – right?”

November 18, 2010 / Ed Jameson / Blog Posts
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Chris is an owner and CTO of a small biotech R&D Company in upstate New York.  He attended my webinar recently and very quickly understood the idea, that by checking the 40% box on the cost portion of his NIH proposal he was leaving a lot of money on the table.

Chris downloaded the NIH indirect rate projection template from our website right after the webinar, sat down and projected an indirect rate in about 20 minutes, and emailed his assumptions over to get my feedback.

I reviewed his figures and coordinated a WebEx session so I could give him some live feedback.  After about a 40 minute conversation we were done and Chris is now prepared to use a 30% fringe and 54% F&A rate on his December 5th NIH proposal.

Before we hung up the phone, Chris wanted to understand how much money we made him with his new indirect rate structure.  I could hear his brain humming as he mentally calculated the difference between the 0% fringe and 40% F&A rate that he would have asked for if he hadn’t gone through the process.

He quickly commented to me that it was something over $400,000 and then a few seconds later, it really dawned on him ….“$400,000 – that’s on every proposal – right?”

With the proposal deadline a few weeks away, Chris realized that he didn’t have the time to implement all the accounting changes that will be necessary and understands that on the day after he submits his technical proposal he’s going to need to do some accounting homework and submit a pile of paperwork to DFAS with me in order to get his rate negotiated.

Chris summed up his desire to learn government grant accounting and go through our phase 1 survival kit training as not something he was looking forward to, but as he put it “for $400,000 per proposal, it will be a lot easier”.

Unfortunately, things were not as easy for Steve, another client who came to us after he realized he made the mistake of not negotiating his indirect rate.

 

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Ed Jameson, CPA, Managing Partner

I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.