Because the grantee institution will reimburse the non-grantee institution for both salary and fringe, fringe for the individual should be budgeted using the non-grantee institution’s rate. For example, if an individual whose primary appointment is at BWH is included in a Harvard budget via a billing agreement, BWH’s fringe rate should be used in the budget for that individual.
The general purpose of the billing agreement is to prevent an employee with a joint appointment from needing to receive two paychecks – one from each institution. The assumption, then, is that the person covered by the billing agreement is essentially operating as an employee of the grantee institution, with the grantee institution incurring all the indirect expenses that go along with that person’s work in our/their space; the grantee institution is just paying them their salary through the home institution rather than setting them up on the payroll there as well. The employee’s home institution cannot be reimbursed for IDC because no indirect costs are incurred there. The grantee institution, however, would be able to take IDC on the amount reimbursed under the billing agreement because the indirect expenses associated with their work would be incurred at the grantee institution. So, in the case where Harvard is issuing an outgoing billing agreement to BWH for a faculty member’s effort, Harvard would recover the IDC associated with that individual’s salary and fringe, and BWH would not be able to recover any IDC.