Contracts for Innovation costs guidance - Innovate UK

Innovate UK Contracts for Innovation was formerly known as the Small Business Research Initiative.

As part of your application you must provide a summary of finances for your organisation and any subcontractors working with you. Assessors will judge the application finances in terms of value for money, such as making sure the proposed cost for effort and deliverables reflects a fair market price.

All costs quoted must reflect actual costs at a ‘fair market value’ and not include profit.

1. Directly incurred costs

These are costs specific to the project. They are charged to the project as the amount actually spent. They must be fully supported by an audit record in justification of a claim. They include:

  • labour costs for all those contributing to the project broken down by individual
  • material costs (including consumables specific to the project)
  • capital equipment costs
  • sub-contract costs
  • travel and subsistence
  • other costs specifically attributed to the project.

2. Overhead costs

Overhead costs should be charged in proportion to the amount of effort deployed on the project. Calculate them using your own cost rates. They can include:

  • general office and basic laboratory consumables
  • library services or learning resources
  • administrative tasks
  • finance, personnel, public relations and departmental services
  • central and distributed computing
  • cost of capital employed.

Costs that are considered unreasonable will be rejected.

You could be asked to provide an itemisation of costs and methods of calculation to support your application.

3. Full economic cost calculations (FEC)

Full economic cost calculations are not relevant in this context.

Contracts for Innovation is a competitive procurement mechanism and tenders are submitted by a variety of organisations. Whatever calculation you use to arrive at your tender price, your application is assessed against bids from other organisations. You should bear this in mind when calculating your tender price. The assessors will also judge whether it reflects a fair market value. You are entitled to include overheads but remember that this is a competitive tender.

4. VAT

VAT is the responsibility of the invoicing business. Applications must list total costs inclusive of VAT. If you think you are VAT exempt then you may quote without VAT but you will not be able to increase invoice values to cover VAT later on.

Last updated: 13 May 2024

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