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related overhead and personnel benefits.

This would result in a decrease in proposed costs and maintain the integrity of the overhead rate application which I believe is absolutely essential.  The disadvantage is that excess funds may be required from SI Private Funds in event a large portion of salary (say 50%) must be absorbed by SI.  In addition the overhead rate would remain at 65%, which rate in itself is now of concern to Dr. Savely.

C.  Hire Dr. Tyson as a consultant which will eliminate the need for application of overhead expenses and consequently reduce the proposal.

Mr. Hurlbut's policy which I also ascribe to is to refuse to treat any person who is a bona fide employee of the Smithsonian as a consultant for the purpose of evading the application of overhead expense.  However, employment of Dr. Tyson is a borderline case, in that he will accept this research assignment on a one-year contract basis only and hence may not be considered as a permanent employee.  As a condition of his service, Dr. Tyson expects that his family will be transported to Korea and back.  Neither our travel policies nor Procurement Regulations would allow such transportation costs to be charged to a contract in view of such a relatively short tour of duty in a foreign country.  On a consultant basis, Dr. Tyson could transport his family at his own expense provided the payment for his services is adequate.

The disadvantage is that Dr. Tyson may in fact be a Smithsonian employee and hence treatment of the cost of his services should bear overhead expense.  There is also the danger involved that the provisions of BOB Circular A-21 might be modified for this Institution to allow us to use a total cost rather than a direct salary and wage basis for computing and applying overhead.  Thus we could conceivably lose overhead expense otherwise properly charged to the contract.  The biggest disadvantage, however, is the possibility or even probability that the Smithsonian may be expected to contribute funds to the project with the result of a loss of both the recovery of overhead expense and a degree of cost sharing.

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