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an interpretation supported by OMB. The F&A costs associated with specialized service facilities are normally charged to users as part of their direct billing rates and are not eligible for recovery in an institution's indirect cost rates. OMB does allow indirect cost recovery for research laboratory space and other space used for research. Thus, if investigators keep their animals in their research laboratories, the heating and other indirect costs are included in the institution's indirect cost rate; but if they keep their animals in a centrally managed facility, the government may ask that all the costs be covered by direct research money. Yet a centralized ARF is where the most reliable and sophisticated research can take place, where the animals can receive better care, and where it is easier and cheaper for an institution to meet all legally mandated standards. Research using the animals is carried out largely in an ARF, so space there is used for research just as is all other research space. Therefore, it would be consistent with how other research space costs are handled to permit recovery of F&A costs of an ARF from the indirect cost pool.

For reasons of consistency with the allocation of F&A costs to the indirect cost pool allowed for other research space, to insure high-quality animal-based research, and for humane care of animals consistent with federal regulations, the committee recommends that institutions be allowed to recover F&A costs of an ARF from the indirect cost pool.

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