F & A Exception Policy

University of Iowa Policy Governing Exceptions To Approved Facilities and Administrative (F&A) Cost Rates
 

Approval Authority for F&A Cost Rate Exceptions

The President has delegated the authority to grant exceptions to the University’s approved facilities and administrative (F&A) cost rates on sponsored agreements to the Vice President for Finance and University Services (VPFUS).  The VPFUS has, in turn delegated this authority to the Vice President for Research who has sub-delegated this authority to the Director of the Division of Sponsored Programs.  The delegations of authority carry with them the responsibility to exercise prudent judgement with regard to the overall benefits that will inure to the University through the approval of such exceptions. 

Procedure for Requesting F&A Cost Rate Exceptions

The University expects that faculty proposals to external sponsors will include the applicable approved University F&A cost rate in the proposed budget.  If a faculty member wishes to request a rate exception, a request for exception must be submitted and approved before the proposal is submitted.  A form requesting the rate exception is required for proposals to for-profit sponsors and can be obtained from the Division of Sponsored Programs.  Clinical trial awards will not receive an additional exception to established policy.

Sponsor F&A Cost Rate Restrictions

Sponsors sometimes restrict reimbursement to less than the full rate.  Sponsor restrictions may be by statute, codified agency regulations, or program terms published in the sponsor’s solicitation or announcement.  The University will generally accept such awards under a class exception when the sponsor restriction is non-negotiable and the proposed activities fit within the overall mission of the University.  However, the sponsor’s rate must be a bona fide restriction initiated by the sponsor and consistently communicated to all applicants. 

F&A cost rate restrictions also do not generally apply to for-profit organizations or foreign government organizations.  Reductions of rates to such organizations constitute a gift of public funds for private benefit as the sponsor is not reimbursing the University for the full cost of the project.  Under certain circumstances, an exception based on sponsor policy may be considered for a legitimate, general University community service, scholars’ or fellowship program sponsored by a for-profit corporation.   

When funding flows from the prime sponsor through an intermediary sponsor, as in the case of federal flow-through awards, then the University’s corresponding rate applicable to the prime sponsor should apply.

Rate Exceptions That Will Be Accepted

  • Exceptions as the result of statute.
  • Exceptions as the result of codified agency regulations.
  • Exceptions as the result of program terms published in the sponsor’s announcement or solicitation.
  • Exceptions provided in accordance with the University’s established policy on corporate sponsored projects processed by the Clinical Trials Office.
  • Exceptions that would promote a vital campus interest to the extent that funding the proposed project at a loss is more important to the campus than recovering full F&A costs(1).
  • Exceptions as the result of rate increases approved after a project begins.

Rate Exceptions That Normally Will Be Denied

  • Exceptions to cover expenses not paid for by the award sponsor such as overdrafts, disallowed costs, sponsor default on payment or withholding of payment due to non-performance or disputes.
  • Exceptions that will not provide equitable treatment to all University researchers applying to the same sponsor.
  • Exceptions where intellectual property rights do not remain with the University.

Applicability and Duration of Approved Exceptions

An exception granted for an individual award based on sponsor policy will apply to the proposed period and the proposed amount of the award stated in the exception request, provided there is no material change in the project that affects the basis on which the exception was approved.  An exception granted on a class basis will be limited to awards which are within the parameters of the class, that is, the specific named sponsor program, and will apply until the basis for granting the exception changes.  Long-standing exceptions are periodically reviewed by the Director of the Division of Sponsored Programs to determine whether sponsor’s policy or practices have changed.

(1) Includes, but is not limited to, (a) awards supporting pilot projects that could lead to significantly greater support, (b) awards that support shared instrumentation or major equipment acquisitions, (c) awards that support conferences, (d) awards that support a community relations interest vital to the campus, (e) hardship cases for a new investigator as defined by the departmental executive officer, (f) awards that support building renovation, (g) supplements for a student services activity which the campus must provide or, (h) other types of supplemental funding for an established campus program such as for library holdings, performances, or exhibits.