F&A, or indirect costs, are defined in Uniform Guidance for Federal Awards as, “costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved.”

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).

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 identifies those major functions as: 

1. Instruction and departmental research
2. Organized research
3. Other sponsored activity
4. 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.” 

Recovered F&A costs strongly impact the University’s ability 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. 

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. 

Sponsored research is defined in Uniform Guidance as “all research and development activities that are sponsored by federal and non-federal agencies and organizations." This includes “activities involving the training of individuals in research techniques (commonly called research training) where such activities utilize the same facilities as other research and development activities and where such 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 sponsored research activities: 

1. Basic and/or applied research activities.
2. Maintenance of facilities, equipment and/or operation of a facility which will be used for research.
3. Training of individuals in research techniques (research training).
4. Publishing research results.
5. Data collection, evaluation, analysis and/or reporting. 

The examples listed above are not all-inclusive. When in doubt of the project activity type for applying an F&A rate, contact SPS Pre-Award for guidance. 

Sponsored instruction and training is defined in Uniform Guidance as “specific instructional or training activity established by grant, contract, or cooperative agreement,” for federal or non-federal sponsors. Sponsored instruction includes agreements that support curriculum development as well as teaching/training activities (other than research training) whether offered for credit toward a degree or certificate, on a non-credit basis, or through regular academic departments, or by separate divisions, summer school, or external division. 

Some examples of sponsored instruction/training activities:

1. Teaching (instructing) UO students, faculty, or staff.
2. Curriculum development projects at any level, including evaluation of curriculum or teaching methods. Such evaluation may be considered “research” only when the preponderance of activity is data collection, evaluation, and reporting.
3. Projects involving UO students in community service activities for which they are receiving academic credit.
4. Fellowship support for pre-doctoral and post-doctoral training activities, which may include grants to fund dissertation work and travel in relation to a dissertation. 

The examples listed above are not all-inclusive. When in doubt of the project activity type for applying an F&A rate, contact SPS Pre-Award for guidance. 

Other sponsored activities are defined in Uniform Guidance as “programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research.” 

Some examples of other sponsored activities: 

1. Performing a service (e.g., production of goods or materials) for an outside entity, unless the UO is a subrecipient to a prime recipient’s award that is mainly for research or instruction/training.
2. Travel grants.
3. Support for conferences, seminars, or workshops.
4. Support for UO public events.
5. Support for students, staff, or teachers in elementary or secondary schools, or the general public, through outreach-related activities.
6. Support for projects involving UO students in community service activities for which they are not receiving academic credit.
7. Support for projects pertaining to museum or library collections, acquisitions, bibliographies, or cataloging.
8. Programs to enhance institutional resources, such as computer enhancements, etc., except where such enhancements are improvements to research infrastructure.
9. Health services or community service projects

The examples listed above are not all-inclusive. When in doubt of the project activity type for applying an F&A rate, contact SPS Pre-Award for guidance. 

As defined in our negotiated rate agreement, “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.” 

An off-campus F&A rate does not contain the F (facilities) portion of the rate but does include the full A (administrative) portion, which is capped at 26% by the federal government. The 26% off-campus rate applies to any off-campus activity, whether research, instruction, or other sponsored activities. 

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 before the proposal deadline. 

The standard procedure is that UO’s full negotiated F&A rate must be applied unless the sponsor has a published policy on the F&A restriction. Requests for exceptions (granted very rarely and only in exceptional circumstances) 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. 

If a sponsor 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 sponsor does not specify the basis of how the rate is to be applied (i.e., MTDC, TDC, or total project costs, etc.), the sponsor’s lower restricted F&A rate will be applied using a Total Direct Costs (TDC) basis.

It is important to note that the majority of sponsors with lower rates are private foundations, with the large majority of these funds dedicated to launching careers of new faculty. While accepting this lower published rate means that the UO must cover the unfunded cost of research (difference between our published rate and the sponsor’s lower rate), these “seed” funds or early private investment position researchers to secure significant sponsored research through data generated or projects refined through these awards with restricted F&A. In addition, private funders with restricted F&A rates typically have less burdensome regulatory obligations than grants or contracts from federal sponsors, thus take fewer administrative resources to manage. Additionally, private sponsors allow more administrative costs to be directly charged to the award unlike federal awards. 

The F&A Rate Exception (FARE) Request Form is not required 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 request for proposal, general sponsor guidelines, or in an e-mail or letter format obtained from an authorized organizational representative of the sponsor.