Policies & Compliance
- 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
- Export Controls
6.3 Indirect Costs/Facilities and Administrative Costs (F&A)
As mentioned above, the federal government refers officially to indirect costs as facilities and administrative (F&A) costs, sometimes simply called "overhead" costs. Facilities and administrative (F&A) costs are costs that are not readily identifiable with individual projects or, put another way, "those that are incurred for common or joint objectives." In other words, indirect costs cannot be specifically attributed to an individual project. For example, it is difficult to say how much of a PI's lab space is used for a specific research project when multiple projects are being conducted in the same lab. We know the project benefits from the lab space, but it is impractical to accurately calculate the cost associated with that benefit. Accordingly, F&A costs are estimated for each project using a formula that compares all Institutional project expenditures against all the Institutional facility and administrative costs necessary to support all projects. They include such categories as library operations, utility costs, depreciation of buildings and equipment, operations and maintenance costs, grant and contract administration and accounting, and general administrative expenses for central offices.
Whatever we call them, indirect costs are real. The University is dependent upon the recovery of F&A costs in order to maintain the infrastructure necessary to support sponsored activities. Faculty, staff, and students involved in research and sponsored programs experience the benefits of F&A cost recovery every day when they enter a building, turn on the lights, consult with a research assistant, get help from research administration professionals when they write proposals or in managing grants and contracts, or use the telephone, internet or the libraries just to name a few examples.
Current F&A Rates
see more in Quick Reference
|Other Sponsored Activity||35%||26%|
|Other Sponsored Activity||35%||26%|
An off-campus rate can only be used if the administrative structure of the project is relocated from the University of Utah and its affiliates for more than 120 days. Use of this rate requires pre-authorization from Compliance Accounting.
Institutional approval to use the off-campus rate is made on a case by case basis with the advice of Ken Erickson, Director, Office of Compliance Services. Please email Ken with the following information:
- List project personnel who: (a) will be working at the off-campus facilities; (b) location and ownership or control of the off-campus facilities; (c) estimated salary/wage costs for each person; and (d) the number of consecutive days each person will be working at the off-campus facilities.
- List project personnel who will be working on campus and estimated salary/wage costs for each person.
- Describe buildings and/or facilities that will be used at the off-campus facilities to perform the project and any associated costs.
- Describe building and/or facilities that will be used on campus to perform the project and any associated costs.
- Describe equipment that will be used at the off-campus facilities to perform the project and any associated costs.
- Describe equipment that will be used on campus to perform the project and any associated costs.
- A brief description of the project.
PI's should copy their sponsored projects officer on this email. The Director’s review may take some time and care should be taken to ensure application deadlines are not missed. Submission of a proposal may be required prior to receipt of the Director’s response. If this is the case, submission is provisional.
If the response approves the off-campus rate, PI's should attach the approval in eProposal for documentation.
6.3.1 Facilities & Administration (F&A)
Sponsored projects are generally charged F&A costs, whether identified in the award or not. The rates to be applied will be consistent with the rates negotiated with the federal government by the University.
It is University policy to apply and collect full F&A on all projects.
The Institutional F&A costs that are necessary to support the research and service enterprises of the University are compiled and presented to the Department of Health and Human Services (DHHS) in a proposal submitted by the University and audited by DHHS. The University and DHHS then negotiate a percentage to be added to the direct costs of each project that will cover the University's actual F&A expenditures for all anticipated projects over a specific time period. For these negotiations, the University categorizes all F&A costs as facilities or administrative based on the nature of the cost.
18.104.22.168 F&A Cost Calculations
The University's F&A Rate Agreements are fixed for a specific period of time and should be used for all grant or contract applications, unless there is a restriction prohibiting indirect costs or designating another rate for a special program.
Part of the University's agreement with the federal government regarding F&A is that the University will not offer a lower F&A rate to other kinds of sponsors. That means that the University has to use the same rates for commercial sponsors as it does for the federal government. The University would jeopardize its relationship with the federal government (the University's single largest sponsor) if it were to accept lower rates. Further, when conducting sponsored activity, the University strives to be reimbursed for the full cost of that activity. Unfortunately, even when the current F&A rate is added to the direct costs of a research project, a portion of the total costs necessary to support that project may not be recovered by the University because of limitations created by federal allowable cost principles. The University would in effect be subsidizing the actual costs of a sponsored activity when nonstandard F&A rates are applied. While some may perceive that F&A is discretionary, the University could not maintain sponsored activity on campus for long without reimbursement for the costs required to support the research and service enterprise. Even at the current rate the University ultimately only collects a little less than 50 cents on every dollar spent by the University to support sponsored activity infrastructure.
Indirect costs are charged to a project by applying a percentage to the total direct costs (TDC) of the project. In some instances the TDC may be modified to exclude capital equipment, participant support, patient care, and subcontract expenditures in excess of $25,000. This rate is known as the modified total indirect cost rate (MTDC).
Note: The University charges F&A on the first $25,000 of each sub-agreement for a project period. Any amount above $25,000 for each sub-agreement is not subject to F&A for the remainder of the project period.
The F&A being requested can not exceed what would be allowable using the University's negotiated rates and exclusions. Therefore, calculate the F&A using both the sponsor's F&A rate as well as our negotiated rate to ensure we are not requesting excessive F&A. If the indirect costs are excessive, modify the percentage being applied to the TDC until you arrive at indirect costs that are equal to, but not more or less than, what would normally be requested using our negotiated rate.
Waivers are rarely given, and only in exceptional circumstances. Before a waiver can be established, it must be reviewed by OSP and ultimately approved by the Vice President for Research. The final decision on F&A waivers or reductions is under the authority and at the discretion of the Vice President for Research. Principal Investigators are not delegated this authority and are not authorized to negotiate or to accept reduced indirect cost rates from any sponsor.
An F&A waiver form is required in eProposal as part of the document summary sheet creation when there is a difference between the University's approved F&A rate and the proposed rate, unless it falls within the exceptions listed in Generally Accepted Waivers. In these cases, supporting documentation, as well as OSP review and approval, is required.
F&A waivers may not be used to supplement direct costs by repurposing indirect costs. The University expects each project budget to fully support the financial requirements of the project, and to include both adequate direct and appropriate indirect costs. Faculty should establish realistic project outcomes and budget accordingly. If a project’s objectives cannot be met without waiving or reducing F&A, or repurposing indirect costs to direct costs, faculty should consider either revising the scope of work or arrange for cost-share support.
Note: When a Principal Investigator's or the University relationship to a sponsor results in a potential conflict of interest with the University, the University will not be able to deviate from the standard negotiated F&A rates for that sponsored project without specific approval from the Vice President for Research.
22.214.171.124.a Generally Accepted Waivers
OSP has the authority to accept external funding at less than the maximum allowable F&A rate if it falls within the exceptions set forth.
In all cases, the principal investigator will need to supply documentation. For written universal policies, provide a copy of the sponsor's policy and/or guidelines at the time of proposal review or agreement negotiation. This policy, if not published in a request for proposal or sponsor guidelines, must be on the sponsor's letterhead and signed by the sponsor's authorized official.
Generally Accepted Waivers:
- Project transfers of non-federal funding in cases where the prior institution's F&A rate is lower than that of the University [Note: federal funding transfers that are lower than the negotiated rate will require a waiver form.]
- Private foundations or non-profit entities, with a published "written universal policy" rate that limits F&A. (i.e. Muscular Dystrophy Association 10%) Projects with for-profit sponsors or industry foundations will always require a waiver when the proposed rate is less than the applicable negotiated rate, unless they are providing a fellowship and have a written universal policy. See the procedure to Request an F&A Rate Waiver.
- "Written and universal" policies of paying a specific F&A rate for all similar agreements,
situations, or conditions regardless of which institution or site is the recipient
of the funds, the University will accept that rate. Again, not applicable with for-profit entity sponsors.
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.
- Exceptions by statute or regulation for federal sponsors (ONR, USDA, NSF participant support, etc.)
Per the Board of Regents policy, requests shall include full F&A when the prime sponsor is a federal agency.
An F&A waiver form is required when:
The prime sponsor is federal and we are requesting less than the negotiated rate or;
When the sponsor is not federal and we are requesting less than 10%.
Existing projects and previously submitted proposals may use the previously established rate.
OSP maintains wide discretion to 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.
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. See the Procedure on TFFA
126.96.36.199 F&A Activity Types
There are three main F&A activity types under the University's negotiated agreement. They are: (1) "Sponsored Research," (2) "Sponsored Instruction and Training," and (3) "Other Sponsored Activities." It is important to choose the correct activity type for a proposal, since it determines which F&A rate to use. It is also important to remember that the activity is what occurs during the project period and not what might result after the project period. The sponsor is providing support for the activity at the time of the project, and therefore the F&A activity type should reflect what occurs during the project period only. When in doubt, contact OSP for guidance.
"Organized Research" consists of "all research and development activities that are sponsored by federal and non-federal agencies and organizations," according to Uniform Guidance. This includes "Activities involving the training of individuals in research techniques" where the activities "utilize the same facilities as other research and development activities and where these activities are not included in the instruction function." Sponsored research is combined with University research under the function of organized research for F&A purposes.
Some examples of "Organized Research" activities:
- Basic and/or applied research activities;
- Maintenance of facilities, equipment and/or operation of a facility which will be used for research;
- Training of individuals in research techniques (research training);
- Publishing research results; or
- Data collection, evaluation, analysis and/or reporting.
"Instruction" consists of specific instructional or training activity established by grant, contract, or cooperative agreement," according to Uniform Guidance.
Some examples of "Instruction" activities:
- Instructing University students, faculty, or staff;
- Instructing teachers or students in elementary or secondary schools;
- Instructing the general public;
- Curriculum development projects, including evaluation of curriculum or teaching methods;
- Projects involving University students in community service activities for which they are receiving academic credit; or
- Fellowship support for pre-doctoral and post-doctoral training activities, which may include grants to fund dissertation work and travel in relation to dissertation.
Other Sponsored Activities:
"Other Sponsored Activities" consist of "programs and projects financed by federal and non-federal agencies and organizations which involve the performance of work other than instruction and organized research," according to Uniform Guidance.
Some examples of "Other Sponsored Activities":
- Performing a service (e.g., production of good or materials) for an outside entity, unless the University is a subawardee on the entity's prime award that is primarily for research or instruction/training;
- Travel grants;
- Support for conferences, seminars, or workshops;
- Support for University public events;
- Support for projects involving University students in community service activities for which they are *not* receiving academic credit;
- Support for projects pertaining to museum or library collections, acquisitions, bibliographies, or cataloging;
- Programs to enhance institutional resources, such as computer enhancements, etc.; or
- Health services projects.
6.3.2 Interdepartmental/Inter-collegial F&A Distribution
If investigators on a proposed project, including the principal investigator, come from more than one college or department, companion projects provides a vehicle for all centers, institutes, departments and colleges represented by project staff contributing significant effort to receive credit and distribute the funding and F&A payments made to the University. See Establish Companion Projects or F&A Distribution in the Procedure Library.
- Cost Accounting Standards
- Major Budget Categories
- Indirect Costs/Facilities and Administrative Costs (F&A)
- Budget Justification
- Cost Sharing & Approval Requirements
- Cost Share Management