Facilities and Administrative (F&A) Cost Rates
- Background
- F & A Cost Rates
- Applying and Calculating F&A Cost Rates in Proposal Budgets
- Exceptions to the Negotiated F&A Cost Rates
- Definitions
Background
As a publicly supported institution, the University is obligated to The Regents and the State to recover the full costs of sponsored research activities. Facilities & Administrative (F&A) costs are reimbursement for costs incurred and paid primarily with public funds from the State of California to cover actual operating costs incurred by the University for facilities and administrative personnel necessary to support extramurally funded research. All organizations require an infrastructure of buildings, equipment, management, administrative and fiscal systems, and staff to carry out the activities of the organization.
The federal Office of Management and Budget (OMB) Circular A-21, Cost Principles for Education Institutions, defines F & A costs as "those incurred for common or joint objectives and therefore not identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."
As a recipient of Federal funds, UCI is required to negotiate a F&A cost rate agreement with the Department of Health and Human Services (UCI's cognizant federal audit agency) to establish F&A cost rates for use with UCI's extramural awards. UCI's current rate agreement, dated July 13, 2007, covers a five-year period beginning July 1, 2006 and ending June 30, 2011. UC Irvine’s F&A Rate Agreement can be found at http://www.ucop.edu/costingpolicy/rates-new.html along with agreements from the other UC campuses and the Office of the President.
The University negotiates "predetermined" F & A cost rates. These rates are final and not subject to upward or downward adjustment based upon actual costing experience. Typically, predetermined rates are significantly lower than those supported by the calculations used by the University to determine its actual F & A cost rate. However, by negotiating a stable F & A cost rate in a multi-year agreement the University avoids annual audits of actual cost data and annual rate adjustments, and also avoids significant rate fluctuations that may result from fluctuating cost pools.
F&A Cost Rates Effective July 1, 2006
| Organized Research | ||
|---|---|---|
| Effective Period | On-Campus | Off-Campus |
| July 1, 2006 through June 30, 2009 | 52.5% MTDC | 26.0% MTDC |
| July 1, 2009 through June 30, 2011 | 53.0% MTDC | 26.0% MTDC |
| Other Sponsored Activities | ||
| Effective Period | On-Campus | Off-Campus |
| July 1, 2006 through June 30, 2011 | 32.5% MTDC | 20.9% MTDC |
| Clinical Trials | ||
| Effective Period | On-Campus | Off-Campus |
| March 1, 2007 and beyond* | 26% TDC | N/A |
| State of California Agreements | ||
| Effective Period | On-Campus | Off-Campus |
| May 9, 2003 and beyond | 25% MTDC** | 25% MTDC** |
| Instruction | ||
| Effective Period | On-Campus | Off-Campus |
| July 1, 2006 through June 30, 2011 | 44.1% MTDC | 26.0% MTDC |
**The UC Office of the President (UCOP) approved the use of this rate. This is the minimum rate applicable to State of California agreements (including Federal funds flowing through a state agency). Unless a State agency program has a published F & A rate policy stated in a funding announcement or federal regulation (applicable to federal flow-through funds), UCI must use the UCOP approved rate. This rate is not applicable to current State of California Agreements where an F & A rate other than 25% MTDC has been agreed to between the state agency and UCI.
Applying and Calculating F&A Cost Rates in Proposal Budgets
The above rates must be used when estimating F&A costs in proposals to extramural sponsors. Use of a rate other than those identified above requires approval of a waiver request.
To calculate F&A costs in Clinical Trial budgets - Multiply the total of all budget items (Total Direct Cost [TDC]) by the Clinical Trial Agreements F&A rate.
For all Other Projects - Calculate the Modified Total Direct Cost (MTDC) base by subtracting the excluded costs listed below from the budgeted Total Direct Costs:
- equipment and capital expenditures;
- patient care costs for services provided by a hospital or clinic, including UCI Medical Center, but not the laboratories of academic departments or organized research units or salaries of personnel providing the services;
- rental, lease and maintenance costs of off-campus space;
- tuition and fee remission;
- financial aid paid directly to University students, but not as salaries and wages, when allowable under the terms of the award;
- subawards issued to other UC campuses; and
- the portion of each non-UC subaward that is in excess of $25,000. Simply stated, UCI indirect costs are assessed on the first $25,000 only of each sub-award. Renewal of a prime award generally requires the issuance of a new subaward, hence indirect costs are charged to the first $25,000 of the renewed subaward. The indirect costs charged by a subaward recipient are not limited by this exception.
Then, multiply the result (MTDC base) by the appropriate F&A cost rate to find the F&A cost amount.
Exceptions to the Negotiated F&A Cost Rates
University of California policy requires the full recovery of direct and indirect (F&A) costs whenever possible. Exception requests are considered for non-profit sponsors, a few situations involving for-profit sponsors and foreign governments, and a Campus Vital Interest. Class exceptions can be approved based upon sponsor policy. Exceptions based on Campus Vital Interest are individual exceptions. See Research Policy 483-4: Consideration of Waivers or Reductions in an Applicable Facilities & Administrative Cost Rate for a description of the categories eligible for a Vital Interest. Contact the Contract or Grant Officer assigned to your unit for questions regarding the appropriate rate to use in your proposal budget.
Definitions
Organized Research - All research and development activities of an institution including sponsored research. Sponsored research includes all research and development activities that are sponsored by Federal and non-Federal agencies and organizations. This term 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.
Instruction - Instruction means the teaching and training activities of an institution, except for research training as described above. 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. Instruction also includes sponsored instruction and training which means specific instructional or training activity established by grant, contract, or cooperative agreement.
Other Sponsored Activities - This means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects, and community service programs.
Clinical Trial - The controlled, clinical testing in human subjects of investigational new drugs, devices, treatments or diagnostics, or comparisons of approved drugs, devices, treatments or diagnostics, to assess their safety, efficacy, benefits, costs, adverse reactions, and/or outcomes.
Such studies may be conducted under an industry-developed protocol or an investigator-developed protocol. These studies are most often conducted in conjunction with obtaining new drug or device approval from the U.S. Food and Drug Administration, under Phase I, II, III, or IV, although they can be designed with the sole purpose of collecting and analyzing data about approved drugs or devices in order to contribute to medical knowledge about the treatment of a disease or medical condition.
Financial support for a clinical trial must be provided by a private entity, including pharmaceutical companies, interest groups, or charities. In all cases, the study must include the prospective enrollment of human subjects and the controlled testing of a drug, device, or diagnostic under an approved protocol.
Retrospective chart reviews, analysis of existing medical data and records, laboratory research, animal studies, and federally-funded projects are not categorized as clinical trials for purposes of applying the clinical trial F&A cost rate.
Direct Costs - Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity and are directly assigned to such activities relatively easily with a high degree of accuracy.
Facilities and Administrative Costs - F&A costs are those incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.
Modified Total Direct Costs (MTDC) Base - The MTDC base is the total direct costs for a project less those budget items that are excluded by agreement with the audit agency. The excluded costs are: equipment, construction, alterations and renovations, hospital or clinic charges for patient care, space rental or lease, tuition and fee remission, scholarships, and the amount that exceeds $25,000 of any subaward. See the Calculation section for more information.
Off-Campus Projects - Projects that are based at facilities not owned, or leased and maintained by the University. However, if the project is conducted in leased space and the lease costs are directly charged to the project, the off-campus rate must be used. If the project involves both on-campus and off-campus sites, either the on-campus or off-campus rate generally should be applied, consistent with where the majority of the work is to be performed as measured by salary cost. The use of both on- and off-campus rates may be justified if both rates can be clearly identified with a significant portion of project salaries, meaning 25% or more of total salary/wage costs and the project's total salary/wage costs exceed $250,000.
Project Period - Project period means the total time for which support of a program has been approved, initially or by a renewal award. As used by the Public Health Service, Project Periods consist of one or more annual budget periods with funding for future years beyond the initial budget period provided on a non-competing basis.
Total Direct Costs (TDC) - TDC is the total of all direct costs budgeted for a project.
