Summary of ASU F&A rates

Arizona State University's (ASU) Facilities and Administrative (F&A) costs, which are also known as "indirect" costs, are developed under the requirements of the U.S. Office of Management and Budget Circular A-21, Cost Principles for Educational Institutions, (A-21).

ASU negotiates F&A rates or amounts with the Department of Heath and Human Services (HHS) under A-21 for the following cost incurring activities:

• Organized Research (On-campus and Off-campus)
• Instruction (On-campus and Off-campus)
• Other Sponsored Activities (On-campus and Off-campus)

View the FY 2007 - FY 2011 F&A rate agreement.

For more information, see frequently asked questions about F&A.

History of ASU F&A Rates

F&A rate calculation

The F&A rates allocable to each of the above activities are calculated by the development of "pools" of F&A costs (the numerator) and of allocation bases for each activity (the denominator). The pooled dollars are divided by their respective bases, resulting in the dollars allocable to that activity. The dollars are then divided by a "distribution base" from which a rate results. That rate represents the percentage which must be added to direct cost dollars to represent the "indirect" cost of the project or activity.

Review Guide for Long Form University Indirect Cost Proposals (December 2006 version): PDF Format.

F&A cost pools

The F&A cost pools are mandated by A-21. They are comprised of the following categories of costs:

• Depreciation, including buildings, land improvements and equipment.
• Interest, for building bonding.
• Operation and Maintenance, which includes costs incurred for the administration, supervision, operation, maintenance, preservation and protection of the institution's physical plant. It includes utilities, repair and maintenance, insurance, public safety, environmental health and safety, etc.
• General & Administrative, which includes costs incurred for the general executive and administrative offices of the University, and other expenses of a general purpose. They include Human Resources, Purchasing and Business Services, Financial Services, President & Provosts' offices, etc.
• Sponsored Projects Administration, which includes those costs incurred by separate organizations primarily to administer sponsored projects. It includes only includes costs incurred by the Office for Research and Sponsored Projects Administration.
• Departmental Administration, which includes those costs incurred for administrative and supporting services that benefit common or joint departmental activities or objectives in dean's offices, academic departments and divisions, organized research institutes, study centers and research centers.
• Student Administration and Services, which includes those costs incurred for the administration of student affairs and for services to students, including expenses of such activities as the Dean of Students, admissions, registrar, counseling and placement services, student advisors, student health services, etc.
• Library, which includes those costs incurred for the operation of the library system, including the cost of books and materials.

Distribution base

The distribution base for the various cost incurring activities consists of the "modified total direct costs" of that activity, as defined by A-21. Modified total direct cost, or MTDC, is comprised of salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract. Equipment, capital expenditures, tuition remission, rental costs, scholarships and fellowships and the portion of subgrants and subcontract in excess of $25,000 are excluded from MTDC.

F&A waivers

Indirect costs, which are officially termed "Facilities and Administrative (F&A) Costs," commonly referred to at the University as "IDC", are costs associated with carrying out sponsored projects but are difficult to quantify with respect to any given project.  Heat, maintenance, building depreciation, library use, human resources, purchasing, and payroll are all examples of indirect costs.  Funds received as indirect costs are reimbursement for funds expended for central and departmental administration, buildings and grounds, and library costs.

These costs are real costs. ASU is dependent upon their recovery in order to maintain the infrastructure necessary to support our sponsored projects.  Faculty experience the benefits of F&A cost recovery every day -- when they turn on the lights, when their graduate student gets paid, when they order a piece of equipment, when they ask for a time extension on their project, when they file an invention disclosure, when they pick up the telephone, when they use the library, and when they access the Internet.

ASU's policy is to recover full indirect costs on all sponsored projects where specific written agency policy does not preclude it.  ASU will agree to an indirect cost rate that is less than the federal negotiated rate only if it is part of the sponsor's written policy and the policy is applied uniformly to all institutions funded in that particular program area.

Do you need an F&A Waiver?

If you think you need an F&A Waiver, you should first review the F&A Waiver decision flow chart below. An explanation of the August 2009 changes to the F&A waiver process can be found in the F&A training presentation (ppt).

*If the project is a subcontract, sponsor refers to prime sponsor.  The requested F&A rate must be indicated in the prime sponsor’s stipulation.  If the F&A rate differs from the prime sponsor’s rate, the answer is no and the right branch of the decision tree should be followed.
**Stipulation: A copy of the application’s guidelines, agency by-laws, or RFP that indicates the amount of F&A the sponsor is willing to pay.  Email messages, letters from the sponsor, or award documents are not stipulations.
***Use of SharePoint for proposal forms is strongly encouraged.  Paper forms are still accepted.

Organized Research: 52.5% on-campus; 26% off-campus
Instruction: 53% on-campus; 26% off-campus
Other Activities: 36% on-campus; 26% off-campus
Fully-burdened (use for industry sponsors): 62.5%

Is your sponsor a non-federal sponsor?

Access the Approved F&A Waiver List.
If your sponsor, program, and rate are included on the list, then no further action is necessary.  Please check the appropriate box on the Form 300.

Is your sponsor a federal agency?

For all federal sponsors and their programs, please include with your proposal a copy of the page in the program announcement or application packet that indicates a reduced F&A cost rate.
Stipulated federal rates do not require OVPREA approval, but the stipulation must come from the agency's bylaws, application kits, or program announcements/calls for proposals.  federal agencies are not listed on the waiver list.

What if your non-federal sponsor or program is not on the Non-Federal F&A Waiver List?

1. If your sponsor is a non-profit, provide a copy of the reduced F&A stipulation with your proposal package.  The stipulation must come from the agency's bylaws, website, application kits, or program announcements/calls for proposals.  Email messages or letters from sponsors are not adequate for stipulation purposes.  Then check the appropriate on the Form 300.  Additional approvals are not required.  ORSPA has the authority to approve these waivers.

2. If you sponsor is non-profit and you do not have a stipulation, you will need to request a waiver from the OVPREA.  Submit your justification for the reduced rate to the Office of the Vice President for Research and Economic Affairs (OVPREA) via Sharepoint.  Please note that OVPREA will not consider F&A waiver requests unless your department Chair and/or Director and Dean have approved the waiver request in writing. Indirect cost waivers may not be handled on a same-day basis, so please allow for as much advance notice as possible.  When you submit a waiver request to OVPREA for approval please make sure to include your proposal budget and justification.

3. All requests for reduced F&A on for-profit projects require a waiver from the OVPREA.  Submit your justification for the reduced rate to the Office of the Vice President for Research and Economic Affairs (OVPREA) via Sharepoint.  OVPREA will not consider F&A waiver requests unless your department Chair and/or Director and Dean have approved the waiver request in writing.  Indirect cost waivers may not be handled on a same-day basis, so please allow for as much advance notice as possible.  When you submit a waiver request to OVPREA for approval please make sure to include your proposal budget and justification.

What else should I know?

ORSPA will not submit a proposal with reduced F&A if it does not have OVPREA approval, where such approval is required.  It is the Principal Investigator's responsibility to secure approval prior to sending the proposal to ORSPA for submission.

A waiver is required for continuation/supplemental proposals unless it is clear that the waiver was authorized for the life of the current competitive segment of the award.

For further information in regards to this process please consult RSP 508-02 or the appropriate work instructions (DP-50 and SN-30).

PLEASE NOTE: Unless your proposed funding is federal or subfederal in nature, if you request a waiver – whether your sponsor is on the waiver list or not – ASU expects you to include, as part of your direct cost budget, those items that are normally included as indirect costs.  These type costs include administrative salaries, routine office supplies, computer fees, subscriptions, office equipment, basic telephone and fax costs, and postage.  Please consult your Research Advancement staff or your Sponsored Projects Officer for further advice in this area.

Charging F&A costs as direct costs

Related policy: RSP 508-01

BOTTOM LINE: If your project involves direct costs that would normally be charged as facilities and administrative (F&A) costs:

• Be sure to justify the costs in your proposal narrative, explaining the unusual circumstances that support treating them as direct costs.
• Complete the Cost Accounting Standards (CAS) Exception Form and include it with the ORSPA 300A form when you get approval signatures.
• Guidelines are available in General Criteria for the Treatment of Costs Matrix (MS Word).

Here's an example: Normally, office supplies such as paper would not be considered a direct cost on a project, and federal laws would prohibit you from charging them to your project. However, if your project requires you to send out 10,000 surveys, then it would be reasonable to purchase paper as a direct cost on your project. To do this, you would need to fill out the CAS Exception form.

What are F&A costs?

F&A stands for facilities & administrative costs. F&A costs are expenses that cannot be easily charged to a project. For example:

F&A costs are also known as indirect costs (IDC), overhead, or administrative costs.

• electricity,
• building maintenance,
• office supplies,
• administrative staff,
• etc.

Since F&A costs are difficult to charge to a project, they are computed as a percentage of overall project costs.

What are direct costs?

Direct costs are costs that can be directly assigned to a particular project easily and with a high degree of accuracy. For example:

• salaries for people working on the project,
• materials and supplies that are part of the project,
• travel costs,
• etc.

Direct costs must be considered allowable, allocable, and reasonable. They should also be justified and verifiable in the technical proposal as well as the budget narrative.

For more information about F&A costs and direct costs, review the General Criteria for the Treatment of Costs Matrix (MS Word).