Report of the Property & Finance Committee

Board of Governors Agenda - October 29, 1997 - APPENDIX II


1. Policy on Overhead on Contract Research

Recommended: That the policy on overhead on contract research be increased from a standard 30% of direct costs to 40% of direct costs and be distributed as set out below:

Overhead on Contract Research (Policy 7.7)

1.00 The standard overhead rate on contract research shall be 40%, distributed as follows:

Dean of Faculty 12%
Contracting department or unit 5%
Contracting laboratory 5%
Corporate UWO 9%
Research Promotion Fund 9%
Total 40% of direct costs

2.00 Exceptions to the standard rate of 40% may be made as required by negotiated agreements with government or through negotiations with the Industry Liaison Office.


All Canadian universities have policies to enable the recovery of indirect costs associated with research carried out under contract. The recovery of these costs ("overhead") is essential; without it universities would effectively be using their own resources to subsidize the R&D activities of industrial partners, governments, and other organizations that enter into contracts to gain access to university expertise and facilities.

A systematic study, conducted in the early 1990s by a consortium of Vice-Presidents (Research), concluded that indirect costs are typically in the range of 45-50% of the direct costs. The cost centres that contribute to these indirect costs were identified as follows:

Type of Cost and Explanation

Provision and maintenance of utilities and building services to space.

Building Use
Utility derived from buildings.

Central Administration
Contract services, purchasing, human resources, accounting, payroll, research services, industry liaison

Library operations, excluding library books and periodicals, which are capitalized and amortized through "equipment and furnishings."

Capital Expenditures
Equipment and furnishings provided, including computing equipment and library books and periodicals

Indirect Technical Costs
Technical services and similar indirect costs.

Faculty/Department Administration
Services provided for research activities within the Faculties, Departments, and other academic or research units

Source: Group of Ten Vice-Presidents (Research), 1993

Most universities in Canada of comparable size and research strength as Western have policies to recover 40% indirect costs. Most also have policies for reduced overhead (10-15%) on grants in aid of research from private sources. At Western, the policy has been to recover 30% overhead on contracts only. Despite the fact that Western's overhead recovery is less than the norm, many researchers oppose the concept of overhead and see it as a grab on research funds by the University. One remedy for this difficulty is for researchers to involve the University's Industry Liaison Officers early in the contract negotiation stage to ensure that overhead is properly budgeted in addition to direct costs. Another remedy, one that would directly benefit the researchers, would involve a revision of the standard overhead rate and distribution.

The current distribution of overhead on research contracts is:

Dean of Faculty 15%
Corporate UWO 9%
Research Promotion Fund 6%
Total 30% of Direct Costs

The revised rate and distribution would have the following benefits:

It is important to note that this policy, if adopted, would be the standard from which exceptions may be necessary. For example, Government of Canada contracts now provide for 65% overhead on the salary component only. The new contract between the Government of Ontario and the Ontario Centres of Excellence will likely provide for 30% overhead on all direct costs.

This proposal has been reviewed and approved by the University Research Board, the Senate Committee on University Planning, and the Senate (October 17, 1997).

2. Affinity Program for Financial Services for Faculty, Staff and Alumni

Recommended: That the Board of Governors authorize the establishment of a business relationship with Canada Trust to develop an affinity program to provide financial services to alumni, staff and retired staff.


In May 1997 the University sent requests to 15 financial institutions to obtain proposals for the provision of a range of financial services to alumni (125,000), academic staff (1,400), administrative staff (1,400) and retired staff (1,400). The types of financial services to be considered included mutual funds, registered retirement savings plans, life income funds, general banking, loans and mortgages, financial planning services, and credit cards.

The purpose of this affinity program is to offer financial services that provide value to the participants, that are profitable for the supplier and that provide a financial contribution to the University. The University will not provide mailing lists of current or retired staff to Canada Trust, however we will provide such information about alumni.

In order to inform various employee groups about this initiative, a copy of the request for proposals was sent to the President of each employee group and to members of the University's Pension Board. The Board of the Alumni Association has also been informed as this initiative has developed.

A group consisting of Peggy Collins (Purchasing Manager), Ted Garrard (Vice-President External), Keith Gee (Director, Pensions and Benefits), Susan Horvath (Director, Alumni Relations and Development) and Stu Finlayson (Senior Director, Financial Services) reviewed the replies received, interviewed representatives from Bank of Montreal, Toronto-Dominion Bank and Canada Trust. They selected Canada Trust, in conjunction with Meloche Monnex Inc., as the most appropriate partner. Meloche Monnex is part of the CT Financial Services group of companies and has experience with affinity programs for home and auto insurance.

There is currently no successful affinity program in place for financial services that can simply be duplicated for use by UWO. Accordingly, we feel that it is necessary to design and develop an affinity program that will be accepted by potential users.

Canada Trust proposed a methodology which will include conducting research by way of independent focus group meetings in order to gather information about attitudes toward and expectations from affinity programs. In addition, Canada Trust will conduct telephone interviews to gather quantitative data. They will share results with UWO and design various test offers and products for the program.

It is expected that the research and testing will be completed by May 1998 and that this work will indicate which financial services and products will be the most attractive to alumni and current and retired staff.

Canada Trust has offered to invest internal resources in the amount of $100,000 in order to complete the research necessary for this program. Canada Trust has also offered to pay $25,000 to UWO to assist with costs related to the research and data gathering.

Canada Trust has agreed to pay compensation to UWO based on new volume of business generated by the program. These arrangements will be negotiated based upon the types of services offered by the program.

The 15 financial institutions invited to participate were Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank, Royal Bank, Toronto-Dominion Bank, Midland Walwyn, Canada Trust, Manulife, London Life, American Express, Monnex, Affinity Group, Mutual Life and St. Willibrord Community Credit Union.

3. New Residence Feasibility Study and Initiation of Design Phase

On October 2, 1997, the Board of Governors authorized a feasibility study, including preliminary design considerations, for additional University residence space. Expressions of Interest from consultant/design firms have been received and a short list of candidates has been scheduled for interviews. An internal University study has been on-going. The information attached indicates that there is sufficient demand and that the construction of a 400 bed residence is financially achievable. A review of off- and on-campus locations and the extremely tight schedule for completion in August 1998 indicates that the best site for the construction is the University Drive site. This site selection will be confirmed by the soon-to-be-selected design team.

Attached: [For WWW, available from the University Secretariat] Annex 1- Feasibility Study
Annex 2 - Site Review
Annex 3 - Financial Model

Recommended: That the Board of Governors accept the Feasibility Study for a new student residence and authorize initiation of the design phase.

Subject to Board approval of this recommendation, a design team will be engaged to begin the design phase for a new residence. This will include site selection and design of a new student residence of approximately 400 bed capacity within the financial scope set out in the financial model. It is expected that Board approval of the residence project and siting will be presented to the Property & Finance Committee and the Board in January 1998. The funding for the initial design phase will be provided by Housing.


1. Environmental and Safety Incidents

Fire - 1130 Western Road

On September 23, 1997, a fire occurred at 1130 Western Road. Two UWO plumbers were repairing a broken water line with a torch when a wooden wall ignited. A quick response to the accident limited damage to approximately $3,500. An investigation has been conducted and a number of procedural recommendations have been made and are being implemented.

2. Scholarship/Prize/Award Revisions

On behalf of the Board of Governors, the Property & Finance Committee has approved the following changes in existing awards, prizes and bursaries:

Dorothy Thompson Awards (Any faculty)

Change in Number From: 14
To: 12 awards, effective for May 1998

Daughters of Penelope Award (Faculty of Arts/Classical Studies)

Change in Value From: $100
To: $200

Wilhelmina and J. Gordon McIntosh Prize (Faculty of Graduate Studies/Business)

Change in Value From: $400
To: up to $400

McIntosh Prize in Canadian Literature (Faculty of Graduate Studies/Arts)

Change in Value From: $750
To: up to $900

W.A. Bottom Bursary in Physiology (Faculty of Graduate Studies/Physiology)

Change in Name To: W.A. Bottom Award in Physiology

Change in Terms From: Awarded to a graduate student on the basis of need.
To: To be awarded annually to an outstanding graduate of the MSc program in Physiology, based on achievement in laboratory, thesis writing and defense, and teaching. The recipient will be selected by the Graduate Program in Physiology Selection Committee.

Change in Value From: Up to $200
To: $500