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Facilities and administrative costs (F&A)

F&A links

Overview

Facilities and Administrative costs (F&A), also referred to as "indirect costs" or "overhead," are actual costs that the University of ÁùºÏ±¦µä, Reno (University) incurs when research, education or outreach projects are performed at the University. These costs include the following: administration; utilities; buildings and grounds operations and maintenance; library-related expenditures; various types of University services such as telephones, computer infrastructure and postage services; departmental, college and service unit administrative costs; and federally-mandated research compliance.

All sponsored projects are required to charge the full federally negotiated F&A rate regardless of the sponsor. This requirement to charge the full F&A rate rule applies to applications and proposals submitted to government agencies, private companies, industrial groups, foundations, or other organizations. The requires all federal sponsors to pay the University's federally negotiated rate unless an agency has a statutory exemption.

F&A costs are reimbursement for actual costs. Full F&A should be calculated in the proposal budget. It should be emphasized that F&A costs are not merely convenient accounting fictions; they are factual obligations and costs incurred by the University. The assessment made against sponsors for F&A costs, therefore, is reimbursement to the University for costs actually incurred. It is not in any sense profit, bonus or a service fee. The University cannot afford to accept funds for activities without recovering the total (direct and F&A) costs of the activities. When the University must pay these costs from their own funds, money must be diverted from other needs. On rare and unusual circumstances, the University may agree to waive F&A based on an assessment of the value of a program to the University as a whole and not just to a specific investigator or department.

Responsible sponsor representatives are fully aware that F&A are a sizeable portion of the total cost of supporting research. Sponsors judge proposals not by the F&A rate but by the professional standing of the faculty member, the merit of the proposed work and the pertinence of that work to their own goals.

Federally negotiated F&A rate agreement

The University's cognizant federal agency is the U.S. Department of Health and Human Services.

A copy of the University's current F&A rate agreement is available upon request.

Elements of F&A cost

Facilities:

The facilities portion of F&A includes depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operations and maintenance expenses and library expenses.

Administration:

The administration portion of F&A includes general University administration and expenses, departmental administration, sponsored projects administration, student services administration and all other types of expenditures not  specifically listed under one of the subcategories of facilities.

Calculating F&A costs

The F&A rate is a percentage of a base amount established by negotiation with the cognizant federal agency on the basis of the institution's projected costs and distributed as prescribed in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The appropriate F&A rate to be used is determined by the type of project work. Sponsored project types are research, instruction, public service and student service. Current rates can be found in the quick reference guide on the Sponsored Projects website.

To determine F&A costs, calculate the sum of all budgeted direct costs (total direct costs). Next, calculate modified total direct costs (MTDC) by subtracting any of the budget items listed below. Finally, apply the appropriate F&A rate (percentage) to MTDC (multiply MTDC by F&A rate). The resulting figure is the F&A cost. Example: $100,000 (MTDC) x 44% (on-campus research F&A rate) = $44,000 (F&A cost).

MTDC excludes the following costs:

  • Capital expenditures
  • Equipment (any one item over $5,000)
  • Patient Care
  • Rental costs of off-site facilities
  • Scholarships and fellowships
  • Subcontract portion in excess of $25,000
  • Tuition remission
  • Participant support

The on-campus F&A rate will be applied to any sponsored project that requires utilization of University equipment, library service or University space (space owned or leased by the University and not leased by the sponsored project). The on-campus F&A rate applies to most sponsored projects.

The off-campus F&A rate will be applied only to sponsored projects in which the work is required to be based off-campus because of the nature of the work and the requirements of the award. Convenience of the employee or telecommuting is not a consideration. The current F&A rate agreement defines off-campus as the following:

An off-campus program is one where the preponderance of the program is conducted by the University:

  1. In leased facilities where space related costs (eg rent, utilities and maintenance) are charged directly to the program, OR
  2. In facilities made available (at no cost) to the program by a non-university organization OR
  3. A minimum of 50 miles away from the university over an uninterrupted period of time in excess of 90 days per program year for field work. Short duration workshops are generally considered to be on-campus.

Requesting an F&A waiver

It is the policy of the University to collect the full, negotiated F&A rate on all sponsored projects.

Waiver: An F&A waiver is the difference between the University's approved F&A rate and the sponsor's F&A rate. All voluntary waivers must be approved by the Assistant Vice President for Research Administration. Note: A sponsor policy that mandates an F&A rate that is lower than the University's full F&A rate is not considered a voluntary waiver. For further information on the waiver process, please see the procedure on F&A waivers.