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Facilities and administrative costs – general information

ASU’s policy is to request and recover full F&A costs, whenever possible. ASU will apply the appropriate F&A on all proposals unless the prime sponsor prohibits or has a published policy limiting the F&A rate. ASU as the primary applicant or subgrantee will adhere to the rate limit. ASU subcontractors will also adhere to the rate limit.

What are they?

Facilities and Administrative 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 allows ASU to recover some of its real costs.

How do they differ from direct costs?

Facilities and administration 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 and consultant pay.

For additional information about the differences between F&A and direct costs, see “What kind of cost is this?

What is a base?

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

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

Acceptable documentation of a sponsor’s F&A restriction is outlined in the funding opportunity announcement, published on the sponsor’s website or in other sponsor guidelines. A letter signed by the sponsor’s Authorized Representative (i.e., CEO, CFO, etc.) will be reviewed on a case-by-case basis by the assigned Proposal and Negotiation Team Grant and Contract Officer for acceptability. If acceptable, an F&A waiver is not needed. Letters and emails from For-Profit Sponsors (i.e., Industry) will not be accepted.  

The sponsor says if the ASU/ASUF rates are used, it may impact the decision to fund the proposal. What can be done? 

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, a request for a reduced F&A rate may be submitted through proper channels for consideration.  F&A rate reductions do not carry over to requests for additional funds (i.e., revisions, supplements and renewals). A new request must be submitted each time and there are no guarantees of approval.

Facilities and administrative costs – ASU/ORSPA applicant

Who determines ASU’s F&A rate?

The federal government determines the rates in conjunction with ASU using 2 CFR 200 (Uniform Guidance). ASU’s cognizant audit agency for this process is the U.S. Department of Health and Human Services. F&A cost rates are proposed, negotiated and approved every five years. Fringe benefits (ERE) rates are proposed, negotiated and approved annually. The most current F&A Rate Agreement continues in effect until new rates are finalized.

Why is the Department of Health and Human Services our cognizant audit agency?

There are three cognizant audit agencies (ONR, DoED, DHHS). Only universities who receive the bulk of their sponsored funding from Departments of Defense or Department of Education are assigned to the Office of Naval Research or DoED cognizant audit agencies. All other universities are assigned to Department of Health and Human Services.

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.  Use the F&A rate determination wizard.

Do all projects use the same F&A base? 

No. There are multiple bases, each appropriate to different situations. For instructions on applying the F&A Base in an ERA budget, refer to the ERA Budgets Guide.

Modified total direct costs

F&A is applied to all of the direct costs minus the following:  equipment, capital expenditures, charges for patient care, participant support costs, student tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000.

Total direct costs

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 ASU’s standard rate (or full F&A rate) and who do not stipulate any direct cost category exclusions.

Total costs

This base is determined using total project costs. The Research Advancement Administrator will need to calculate the amount of F&A allowed based on the funding limit, and use that to determine what % on Total Direct Costs to apply in the ERA budget. See How to Calculate Unusual Indirect Costs.

Total direct costs minus exclusions

This XDC 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. XDC is an internal term used in ASU’s Enterprise Research Administration system. F&A is applied to all of the direct costs minus any budget items that are marked for exclusion.

What types of projects are there?

For types of projects, see the F&A Wizard.

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., 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 for which no rent is budgeted, then the off-campus rate will apply. If the project does budget rent for the non-ASU facilities, then if 50% or more of the project’s budgeted personnel costs are incurred at the non-ASU facility, 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 a project qualifies for the off-campus rate in some years but not in others? 

Budget the off-campus rate for the years the project qualifies and the on-campus rate for the rest of the years.

What rate do we use when the sponsor asks for a percentage of total project costs or limits F&A to percentage of total direct costs? 

View the How to Calculate Unusual Indirect Costs for guidance on determining the rate and base, and how to enter into ERA.

Which F&A rate is used if the project crosses fiscal years?

If a start date is 6 months or more into a fiscal year, ERA will calculate amounts using the following fiscal year’s rates.

The sponsor is requesting a revised budget in order to make an award. Which F&A rate should be applied?

Use the F&A rates in the DHHS approved agreement in effect at the time the revision is submitted.

What F&A rate should be used when preparing revisions, supplements and renewals?

Use the F&A rates in the DHHS approved agreement in effect at the time of proposal preparation.

Do all proposals use the DHHS approved F&A 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.

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 an established F and A policy, check ASU’s list of Limited F&A Rates.  If the sponsor rate is 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. Include the policy in ERA 8.1 (Internal Reference Attachments). No further action is needed.

If there is no published, uniformly applied rate, then determine the rate using 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. 

If solicitation is for a “Training Grant” program (as defined in 34 CFR 75.562) or is under “Supplement not Supplant” requirements, a sponsor-restricted F&A rate may apply.

Include a copy of the rate/base required by the program in ERA 8.1 (Internal Reference Attachments).

Note: Federal employees such as program and administrative officers at NSF, NIH, and others are prohibited from requesting a reduced facilities and administrative 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 rate should be used on flow-through funds? 

The prime funding announcement should be reviewed to determine if there is any limitation on the subrecipient F&A rate. If there are any terms and conditions which flow down to a subaward that are specifically stated in the funding announcement limit the rate, those guidelines apply.

If the prime is federal, the F&A terms and conditions flow down to the Subrecipient. If the prime is non federal and there are no flow down provisions, the rates in the F&A Wizard are appropriate.

If no flow-down provisions exist:

  • If prime sponsor is federal, sponsor is non-federal, the federal prime sponsor’s published rate is the applicable F&A rate. (Example: DOE > UofA > ASU) 
  • If prime sponsor is non-federal, sponsor is non-federal, the prime sponsor’s published policy is the applicable F&A rate. If none, use the F&A Wizard. (Example: Hope on Wheels > PHX Children’s Hospital > ASU.

What rate should institutions that will be included as a subaward on ASU’s proposal use?

Review the funding announcement to determine if there is any limitation on the F&A rate.  If the funding announcement includes a limited rate, the rate will be flow down to the subrecipient and the subrecipient should use this rate. Otherwise, the subrecipient should use the federally negotiated F&A agreement in effect at their institution. Where no approved agreement exists and there is no sponsor-published policy, the subrecipient may include up to 10% MTDC for F&A.

Should F&A on the first 25K be applied when ASU’s project includes funds for a federally funded research and development center and/or other federal agency?

If funds will be awarded to a FFRDC (or other federal agency) by way of a subcontract from ASU, F&A on the first 25K should be included. The costs for the subcontract should appear both in the sponsor application and in ERA. However, if the funds will be awarded directly, via an interagency agreement, to the FFRDC (or other federal agency) by ASU’s sponsor, F&A on the first 25K does not apply.  Ensure the FFRDC’s costs are shown in the sponsor application. However, funds to be awarded by interagency agreement between the sponsor and a FFRDC (i.e., will not be subcontracted to the FFRDC by ASU) should not be included in ERA.

Can an example be provided when the rates for ASU and a subrecipient might be different?

An example of this is the Bill and Melinda Gates Foundation. If ASU is the primary applicant, ASU’s F&A cannot exceed 10% TDC. However, Bill and Melinda Gates funding announcement allows for when ASU includes a subaward to an international subrecipient, the international subrecipient F&A may charge up to 15% TDC

Another example of this might be when working on a USDA-NIFE proposal with subaward. The total F&A requested, ASU + all subawards, cannot exceed 30% of total project costs. Review the How to Calculate Unusual Indirect Costs for guidance.

Do the rates in the F&A Wizard apply to projects being transferred in to ASU?

The F&A Wizard has a special section devoted to projects being transferred in by PIs joining ASU. The rates in this section, in combination with Transfer of Sponsored Projects to ASU page, provide information pertaining to these projects.