This policy applies to all staff in the University undertaking externally-sponsored research projects, except where those sponsors and schemes are listed on the Australian Competitive Grants Register. For the purposes of clarity, this policy applies to Categories 2, 3 and 4 as defined in the Higher Education Research Data Collection (HERDC).

This policy does not apply to non-research commercial endeavours such as consultancies, lab testing services and non-research clinical trials. However, the principles of cost recovery apply to such activities.

1.1.    The aim of this policy is to support a sustainable research capability at the University through the recovery of indirect costs of research.

1.2.    This policy aims to support an approach to the pricing of research that represents value to all parties and has regard to competitive neutrality principles.

1.3.    This policy requires transparency in the pricing of research, and in the budget models of the University and faculties.

1.4.    The University will provide ongoing support for operationalising this policy, acknowledging the shared responsibilities involved in successful implementation, by ensuring all staff members have appropriate knowledge, understanding and tools.

1.5.    The University acknowledges the diversity of reasons for entering into a research project. This policy will provide flexibility to manage this diversity.

• Faculties will take a portfolio approach in managing this diversity.
• Heads of budget divisions will be expected to meet annual targets for cost recovery.

1.6.    The University recognises that the sustainability of research requires close attention to the 'scope' and 'price' of research.

2.1.    The University seeks to recover the cost (research cost) for any research it carries out.

2.2.    Funds generated from indirect cost recovery remain in the faculties from which the funds were generated. Faculties will disburse such funds as per individual faculty priorities, policies and procedures.

2.3.    The University mandates the use of charge-out rates for staff time on all externally funded research within the scope of this policy (Schedule A).

2.4.    Charge-out rates incorporate full salary costs, salary on-costs, and a proportion of indirect costs. They do not include the non-salary direct project costs.

2.5.    Where the University (via its staff members) is subcontracted on a grant or research contract by an external party to provide a service, charge-out rates will apply to the contract price.

2.6.    Where the University contracts other parties to provide a service (subcontracting), charge-out rates or other indirect costs are not required to be added to the price paid to the other party.

2.7.    Charge-out rates are not applied to internally funded research, that is, internal funding schemes run by Melbourne Research, faculties or other similar mechanisms.

2.8.    Charge-out rates are not applied to post-graduate student stipends.

2.9.    Faculties may include a discretionary multiplier of 1.1 on non-salary costs. (This allows faculties the option to recover a proportion of costs where research infrastructure or equipment costs are significant).

2.10.  In cases where research sponsors or funders require a more detailed breakdown of costs, an alternative pricing method may be used that produces, where possible, an outcome equivalent to that provided by the charge-out model.

2.11.  Pricing below the mandated minimum charge-out rates may only be approved by the dean or designated authority under exceptional circumstances and by a process of justification, developed and approved by the relevant faculty, and fully documented.

2.12.  Faculties, departments, deans and researchers may charge more than the mandated rates, particularly for commercial research contracts, or in circumstances where there are extraordinary costs to a project.

2.13.  Faculties may also apply a loading to non-salary direct costs to take into account, for example, the costs of providing infrastructure or research platforms.

2.14.  In cases where the University (as opposed to a faculty) negotiates a project at a lower than minimum charge-out rate, it must negotiate with the affected faculties as to how any financially negative impact on the faculties will be mitigated.

3.1.    Researchers are expected to be familiar with this policy and to understand the broad principles of how indirect costs are calculated. With the support of the University, researchers must communicate the University policy on research pricing with the funder.

3.2.    Researchers, in consultation with their faculty/school/department, are expected to price all non-ACGR research (i.e., Category 2, 3 and 4 research) in compliance with this policy. Where this is not possible, researchers must not agree to a price with the funder until the proposed price has been agreed to in principle by the designated authority in the faculty.

3.3.    Researchers must comply with the faculty and/or school processes for negotiating and signing off a research agreement or contract.

4.1.    Faculties must support the introduction of the policy through a communication process to faculty staff members, with the support of Melbourne Research.

4.2.    Faculties are responsible for developing an internal process for managing the negotiation and sign-off of any research agreement or contract under this policy.

4.3.    Faculties must induct new researchers and research administration staff into the research pricing policy and processes.

4.4.    Faculties are responsible for meeting any cost-recovery targets agreed to between the University and the faculty.

4.5.    Faculties must comply with the University policy for research cost-recovery, including maintaining the minimum charge-out rates set by the University and the administrative and financial processes established by the University.

4.6.    With the dean's approval, faculties may modify the charge-out rates upwards or downwards as necessary.

4.7.    Faculties must ensure that higher than the minimum mandated rates are charged for research contracts where there is clear commercial focus.

4.8.    Faculties must develop a programme to incentivise researchers in the recovery of indirect costs. The University does not mandate how this is done, but delegates this responsibility to each faculty in consideration of the diverse research and funding cultures across the University.

5.1.    Melbourne Research is responsible to communicate this policy to the University and to work with faculties in ensuring the policy is understood and effectively implemented.

5.2.    Melbourne Research must set the charge-out rates on behalf of the University and review these annually.

5.3.    Melbourne Research must provide the appropriate University business systems (administration and financial) to support faculty level administration and financial processes.

5.4.    Melbourne Research must provide appropriate budget forms and processes for budget sign-off. This needs to be integrated into the research contracts process.

5.5.    Melbourne Research must provide training and support for faculty research administrators, managers and associate deans (research) in the implementation of the policy and processes.

5.6.    Melbourne Research will provide faculties with 6-monthly reports on cost recovery performance.

5.7.    Melbourne Research is responsible for ensuring that engagement with the University's key funders regarding the new policy takes place. Discussions with funders will take place after consultation with the appropriate faculties. In some cases, it may be appropriate for faculties (i.e. deans or associate deans (research)) to engage with funders on behalf of the University.

• Schedule A - Minimum Charge-out Rates for Category 2-4 Research Contracts and Agreements at the University of Melbourne

• National Competition Policy (Competitive Neutrality)

The Deputy Vice-Chancellor (Research) is responsible for the development, compliance monitoring and review of this policy and any associated guidelines.

The Executive Director, Melbourne Research is responsible for the promulgation and implementation of this policy in accordance with the scope outlined above. Enquiries about interpretation of this policy should be directed to the implementation officer.