Policies & Compliance
- Research Conduct
- Combatting Human Trafficking
- Federal Disclosure Requirements
- Research Handbook
- 1. Roles & Responsibilities
- 2. Standards for Conduct of Research
- 3. Overview of Sponsored Projects Administration
- 4. Funding Sources & Opportunities
- 5. Proposal Development
- 6. Budget Development
- 7. Procedures for the Submission of Proposals
- 8. Award Acceptance
- 9. Award Management
- 10. Research Related Regulations, Policies & Procedures
- 11. Other Conduct of Research Issues
- 12. Acronyms & Definitions
- 13. Glossary
- Procedure Library
- Regulations Library
Budget Development
6.3 Indirect Costs/Facilities and Administrative Costs (F&A)
The federal government refers to indirect costs as Facilities and Administrative (F&A) costs, sometimes informally called overhead. F&A costs represent expenses that cannot be readily identifiable with a single sponsored project but are incurred for common or joint objectives that support the University's research and sponsored activities broadly.
Examples of F&A costs include, but are not limited to:
- Operation and maintenance of buildings and utilities
- Depreciation of facilities and equipment
- Library resources and shared research infrastructure
- Grant and contract administration
- Accounting, compliance, and audit functions
- Central administrative services supporting sponsored activities
Although these costs are not charged directly to individual projects, they are real and necessary. The University relies on F&A cost recovery to sustain the infrastructure that enables research and sponsored programs to function effectively.
Current F&A Rates
The University applies F&A rates negotiated with the federal government. Current rates and additional guidance are maintained in the Quick Reference.
| Project Type | On-Campus | Off-Campus |
|---|---|---|
| Research | 54% | 26% |
| Instruction | 41.5% | 26% |
| Other Sponsored Activity | 35% | 26% |
Off-Campus Rate
The off-campus rate may be used only when the administrative and project activity is conducted away from University-controlled facilities for more than 120 consecutive days. Use of the off-campus rate requires prior institutional approval.
Institutional approval to apply the off-campus F&A rate is granted on a case-by-basis following review by Management Accounting and Analysis within Financial & Business Services.
To requires consideration for use of the off-campus rate, the PI should submit a request to Robert Allen, Associate Director of Cost Accounting & Analysis, Financial & Business Services. The request should include the following information:
- A list of project personnel who will work at off-campus facilities, including:
- The location and ownership or control of the facilities;
- estimated salary or wage costs for each individual; and
- the number of consecutive days each person is expected to work at the off-campus location.
- A list of project personnel expected to work on campus and their estimated salary or wage costs.
- A description of off-campus buildings or facilities to be used, including associated costs.
- A description of equipment to be used at off-campus locations and any related costs.
- A description of equipment to be used on campus and any related costs.
- A brief summary of the project and its anticipated activities.
Review of off-campus rate requests may require additional time. Investigators should plan accordingly to avoid delays that could impact proposal submission deadlines. In some cases, proposal submission may be required prior to completion of the review; such submission will be considered provisional pending final institutional determination of the applicable F&A rate.
If approval is granted, documentation of the off-campus rate authorization must be attached in eProposal for documentation.
6.3.1 Facilities & Administration (F&A)
Sponsored projects are generally subject to F&A costs, whether or not explicitly identified in the award. The University applies F&A rates consistent with its federally negotiated agreement and institutional policy.
It is University policy to apply and collect full F&A on all sponosred projects, unless a specific exception applies (see Section 6.3.1.2)
The University's F&A rates are established through a formal proposal to, and audit by, the U.S. Department of Health and Human Services (HHS). Costs are categorized as Facilities or Administrative based on their nature, and negotiated rates are applied to project expenditures over a defined period.
6.3.1.1 F&A Cost Calculations
F&A costs are calculated by applying teh applicable rate to the total direct costs (TDC) or modified total direct costs (MTDC), depending on sponsor rules.
Under MTDC, certain costs are excluded from the base, such as:
- Capital equipment
- Patient care costs
- Participant support costs
- Subaward costs in excess of the first $25,000 per subrecipient
The University applies F&A only to the first $25,000 of each subaward per project period, regardless of duration.
The F&A requested must not exceed what would be allowable using the University's negotiated rate structure. If a sponsor limits F&A recovery, the budget must be structured carefully to ensure compliance while avoiding excessive or insufficient F&A requests.
6.3.1.2 Waivers
F&A waivers or reductions are granted rarely and only in exceptional circumstances. Authority to approve waivers rests solely with the Vice President for Research (VPR). Principal Investigators (PIs) are not authorized to negotiate or accept reduced F&A rates independently.
A waiver requiest must be reviewed by OSP and supported by appropriate documentation (including an F&A waiver form). When applicable, waiver requests must be submitted through eProposal, unless the project falls under a generally accepted waiver.
F&A waivers may not be used to supplement direct costs. Project budgets are expected to fully support project requirements through appropriate direct and indirect cost planning. If project objectives cannot be met without reducing F&A, investigators should reconsider the project scope or identify alternative cost-share support.
6.3.1.2.a Generally Accepted Waivers
OSP may accept reduced F&A rates without formal waiver approval when supported by documented sponsor policy or statutory restrictions, including:
- Transfers of non-federal projects from institutions with lower F&A rates
- Private foundations or non-profit entities,with published, universal F&A limits (i.e. Muscular Dystrophy Association 10%)
- Statutory or regulatory limitations imposed by federal sponsors
- State of Utah and Utah System of Higher Education (USHE) projects
- Certain VA and intergovernmental agreements
- The University has an agreement with the SLC VA (Office of Veterans Affairs, Salt Lake City Healthcare System) for zero F&A on Intergovernmental Personnel Act (IPA) agreements and 5% TDC on other non-federal agreements with this sponsor (eProposal sponsor code 11177). This includes 5% TDC for the Western Institute for Veteran's Research (WIVR), the SL VA's foundation affiliate.
Projects with for-profit sponsors or industry foundations will always require a waiver when the proposed rate is less than the negotiated rate, unless they are providing a fellowship and have a written universal policy. See the procedure to Request an F&A Rate Waiver.
All generally accepted waivers require supporting documentation demonstrating that the reduced rate is universally applied by the sponsor.
State Entities
Per the Board of Regents policy, requests should include 10% F&A (minimum).
For State of Utah, use the federally negotiated rates for federal flow-thru or 10% for all other agencies and prime funding sources.
State of Utah Generally Accepted Waivers
OSP may accept different rates from state agencies (between the University's negotiated rate and rates cited by state agencies) as necessary with the primary objective being to facilitate the successful initiation and completion of projects.
F&A waivers are not required on State of Utah projects, including all Utah System
of Higher Education (USHE) projects, and are considered a generally accepted waiver.
Departments should provide detailed justification and documentation in eProposal for
using other rates.
Undergraduate wages and research support projects: The University returns all collected F&A on undergraduate salary and wages awarded
on research projects. However, the proposal budget to the sponsor will need to include
all applicable F&A. See also Returned Overhead on Undergraduate Salaries.
Cost Calculations on Generally Accepted Waivers
If a sponsor limits F&A to less than the University's federally negotiated rate, the F&A rate base should be calculated by adding all direct costs (TDC rather than MTDC) with no exclusions or exceptions.
The sponsor's policy will also be flowed to the University sub-recipients.
If you are calculating TDC using the 22% on total federal funds awarded (TFFA) as required by the USDA, add direct costs with no exclusions or exceptions to TDC. 28.20513% of the TDC would be used to arrive at 22% TFFA.
6.3.1.3 F&A Activity Types
The University applies different F&A rates based on the primary activity conducted during the project period, not the eventual outcome, and according to Uniform Guidance.
The three activity types are:
Organized Research:
Research and development activities sponsored by federal and non-federal entities, inlcuding research training conducted in research facilities.
Examples include:
- Basic or applied research
- Data collection and analysis
- Research training activities
- Operation of research facilities
Instruction
Sponsored instruction or training activities.
Examples include:
- Teaching students, educators, or the public
- Curriculum development
- Fellowships supporting instructional training
Other Sponsored Activities:
Sponsored activities that are neither organized research nor instruction.
Examples include:
- Service projects
- Conferences and workshops
- Public outreach programs
- Health service projects
When the appropriate activity type is unclear, investigators should consult OSP during proposal development.
6.3.2 Interdepartmental/Inter-collegial F&A Distribution
For projects involving investigators across multiple departments, colleges, centers, or institutes, companion projects may be established to distribute credit for project activity and associated F&A recovery.
Companion projects support transparent allocation of funding and recognition of effort across organizational units. Procedures for establishing companion projects and distributing F&A are documented in Establish Companion Projects or F&A Distribution in the Procedure Library.
