UO's full negotiated F&A rate must be applied unless the agency has a published policy on the F&A restriction.
What is a Facilities and Administrative (F&A) Rate?
An F&A rate is the federally approved rate for reimbursement of facilities and administrative costs on sponsored projects. Determining, negotiating, and receiving an approved F&A rate is a detailed, data-intensive, time-consuming process, and is meant to capture as best as possible the actual costs of administration and facilities supporting sponsored projects. The F&A rate is only applied to externally-funded projects. The cognizant federal agency responsible for approving the UO's F&A rate is the Department of Health and Human Services (DHHS).
How is an F&A Rate is Determined?
The process of calculating an F&A Rate is to take the total indirect costs associated with the university's major functions and divide them by the total direct costs associated with the same function. Uniform Guidance Appendix III to 2 CFR Part §200 identifies those major functions as:
- Instruction and Departmental Research
- Organized Research
- Other Sponsored Activity
- Other Institutional Activity
For example, the Organized Research rate would be calculated as follows:
Indirect Costs Allocable to Organized Research ÷ Direct Costs in Organized Research Base = F&A Rate
The process of recalculating, proposing, negotiating, and receiving new F&A rates usually takes place every two to three years. The university will often receive a provisional rate agreement, followed by final rates called "predetermined" rates. A predetermined rate is defined as "an indirect cost rate, applicable to a specified current or future period, usually the organization's fiscal year. The rate is based on an estimate of the costs to be incurred during the period. A predetermined rate is not subject to adjustment."
Why is an F&A Rate important to the University of Oregon?
Recovered F&A costs strongly impact the University's ability as a whole to expand and grow research capacity, infrastructure, and service. As such, it is very important that individual projects charge the full and appropriate F&A rate as dictated by our federally-negotiated agreement.
What is Modified Total Direct Costs (MTDC)?
Reference: 2 CFR §200.68 Modified Total Direct Costs (MTDC)
MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and sub-awards and subcontracts up to the first $25,000 of each sub-award or subcontract (regardless of the period of performance of the sub-awards and subcontracts under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each sub-award and subcontract in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.
Reference: The University of Oregon's F&A Rate Agreement
Off-campus F&A and Non-Standard F&A Rates
Off-Campus Definition: An off-campus rate is applicable to those projects conducted in facilities not owned or operated by the University, which include charges for facility rental as a direct expenditure and for which more than 50% of the project salaries and wages are for effort conducted in the rental facility.
Inclusion of Off-Campus Rate in Budget: Projects proposing the use of an off-campus F&A rate in the budget must obtain prior approval from SPS by completing and submitting the F&A Rate Exception (FARE) Request Form in Smartsheet. This must be completed and submitted to SPS at least five business days prior to the proposal deadline.
Inclusion of Non-Standard F&A Rate or return in Budget: UO's full negotiated F&A rate must be applied unless the agency has a published policy on the F&A restriction. Requests for exceptions (rarely granted) must be approved by the Vice President for Research, and are requested by completing and submitting the F&A Rate Exception (FARE) Request Form form. This must be completed and submitted to SPS at least five business days prior to the proposal deadline.
What happens when the sponsor's F&A rate is restricted to a rate lower than the UO's?
If an agency has a published policy including a restricted F&A rate lower than the University of Oregon's current Federally-negotiated F&A rate, and the agency does not specify how the rate is to be applied, the agency's lower restricted F&A rate will be applied to Total Direct Costs (TDC).
The F&A Rate Exception (FARE) Request Form may not be required by SPS when acceptable documentation of the sponsor's requirement is submitted to SPS. Acceptable documentation of a sponsor's restriction on F&A can be in the form of the requirement as it is outlined in the sponsor's RFP or sponsor guidelines, or in an e-mail or letter format obtained from an authorized representative of the sponsor.
F&A Rate Definitions
Reference: 2 CFR Appendix III to Part 200: Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs)
Reference: F&A Rate Changes Memo - Clarification on the application of Facilities and Administrative (F&A) Cost Rates