Facilities & Administrative (F&A) costs

05/02/2012 - 11:50am
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Facilities and Administrative (F&A) costs

What are they? 

Facilities and Administrative (F&A) costs - sometimes referred to as indirect costs, overhead, administrative allowance, or occasionally, institutional allowance - are costs incurred in support of sponsored programs, in general, but not identifiable with any single project. Including requests for facilities and administrative costs (F&A) allows ASU to recover some of its real costs.

How do they differ from Direct Costs?

F&A costs are general in nature, shared by multiple users, where it is not easy to determine each user's share. F&A costs include electricity, water, utilities, and administrative research services.

Direct costs can be assigned to a specific project with a high degree of accuracy. Direct costs include faculty, technical and student salary, ERE, travel, scientific supplies, equipment, tuition, human subject incentives, animal costs, consultant pay, etc.

Who determines ASU's F&A rates?

The federal government determines the rates in conjunction with ASU using OMB Circular A-21.  The rates are reviewed and approved every three years by ASU’s cognizant audit agency, the U.S. Department of Health and Human Services (DHHS).   The most current F&A Rate Agreement is dated June 28, 2011 and continues in effect until new rates are finalized.

Why is DHHS our Cognizant Audit Agency?

There are three Cognizant Audit Agencies (DOD, DoED, DHHS). Only universities who receive the bulk of their sponsored funding from DOD or DoED are assigned to those agencies. All other universities are assigned to DHHS.

Is the rate the same for every project?

No.  The rate and base vary according to the type of project and the project’s performance site.  Please use the F&A rate determination wizard.

What is a base?

It is made up of the specific project costs in your budget that are subject to F&A.

Do all projects use the same F&A base?

No. There are multiple bases, each appropriate to different situations.

Modified Total Direct Costs (MTDC)

F&A is applied to all of the direct costs minus the following: equipment with a unit cost greater than or equal to $5,000, tuition/fees, participant support, in/out patient care costs, rental of outside facilities, amounts over the first $25,000 of each subcontract, and alterations/renovations. Alterations/Renovations are defined as having a cost of $15,000 or more per alteration or renovation. Costs of less than $15,000 are considered a miscellaneous expense.
Total Direct Costs (TDC) The F&A rate is applied to all of the direct costs without exclusions. Total Direct Costs must be used for all sponsors who publish an F&A rate less than our standard rate (or full F&A rate) and do not stipulate any direct cost category exclusions.
Total Costs This base is determined using total project costs.  For assistance with calculation of this unusual base, RAs may contact the PNT GCO assigned to their proposal.
Total Direct Costs minus exclusions This rate is used when a sponsor determines the categories to which F&A may be applied.  For example, some sponsors may allow F&A only on personnel; others may allow all direct costs minus equipment, etc.

What Types of Projects are There?

Organized Research: All externally funded ASU research and development activities that involve inquiry, experiment or investigation to increase the scholarly understanding of the involved discipline.

Instruction: Except for research training, instruction includes all teaching and training activities, whether they are offered for credits toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division.

Other Sponsored Activities: Externally funded projects which do not fall within the criteria for instruction or organized research.

Do I Use the On-Campus or Off-campus rate?

If project activity occurs only at ASU facilities, then the on-campus rate is applied. If project activity occurs only at non-ASU facilities (including projects for which lease payments are direct charged to the project), then the off-campus rate is applied.
 
If project activity occurs both at ASU facilities and at non-ASU facilities (i.e. both on- and off-campus), then a determination is made based on where personnel costs are incurred. If 75% or more of the project’s budgeted personnel costs are incurred at non-ASU facilities, then the off-campus rate will apply. Otherwise, the on-campus rate will apply to the entire project.
 
Subcontractor activities are excluded from the on/off campus rate determination.  Only the portion of work to be actually conducted by ASU is considered.

WHAT IF MY PROJECT QUALIFIES FOR THE OFF-CAMPUS RATE in SOME YEARS BUT NOT in OTHERS?

You should budget the off-campus rate for the years the project qualifies and the on-campus rate for the rest of the years.

Are these the only acceptable rates?

There are some exceptions. However, it should be noted that these exceptions only apply when there are no federal funds involved. Projects with federal flow-through funds must abide by the instructions of the federal sponsor.

 

Industry/For-Profit Sponsored Research Agreements Use the F&A wizard to determine rate.
Clinical Trial Projects Use the F&A wizard to determine rate.
Non-Profit and Non-Federal Government Sponsors

If the funds originate with the federal government and are flowing through the non-profit or the non-federal government sponsor, the federal program’s rates prevail.

If flow-through funds are not involved AND the non-federal governmental or non-profit sponsor has their own established F&A policy, check ASU’s list of Sponsor Limited F&A Rates.  If they are listed, then budgets for that sponsor may proceed to preparation without further ASU approvals.  If the sponsor is not listed, proceed according to published sponsor instructions but include the policy along with the Institutional Bundle (IB).  No further action is needed.

If there is no published, uniformly applied rate, then use the federally negotiated rate for organized research, instruction, or other as determined by the F&A wizard.
Federal Sponsors with a Published Program Rate

Provided the rate is written into the program guidelines, ASU will automatically accept the rate and base indicated.  Include a copy of the rate/base required by the program as part of the Institutional Bundle (IB).

Note:  Federal employees such as program and administrative officers are prohibited from requesting a reduced indirect cost rate unless it is specifically covered by the program announcement or the written regulations governing the program. RAs should immediately refer these requests to the PNT GCO assigned to the proposal.

What if the sponsor does not have an established rate?

If the sponsor does not have a written published policy which they apply to all applicants, then use the Organized Research, Instruction, or Other Sponsored Activities rate, depending on the focus of your project.

Can the sponsor write a letter that says what they are willing to pay?

Letters are unacceptable.  Only published policies or copies of the sponsor’s bylaws or applicable legislation which document the sponsor's established rate are permitted.

The sponsor says if I use the ASU rates it may impact their decision to fund me. What can I do?

If there are published guidelines which specify the amount budgeted for F&A will be used in the review criteria or the sponsor formally indicates that an award will not be issued unless a specific rate is used, you may request a reduced F&A rate for that one instance.  F&A rate reductions do not carry over to requests for competing continuations/ supplements/renewals. A new request must be submitted each time and there are no guarantees of approval.