Policy on F&A Costs

Memorandum

To:Principal Investigators and Administrators

From:Twila Fisher Reighley, Assistant V.P. for Research
Terry Johnson, Associate V.P., F & O & Univ. Controller

Date: December 21, 2006

Re: Policy on Facilities and Administrative Costs (F&A)

Facilities and Administrative (F&A) costs are expenditures for facilities and administrative support for the conduct of research and other sponsored activities that are not readily identifiable with a particular project or activity but, nonetheless, are necessary to the general operation of the University and the conduct of its activities. Formerly called indirect costs, F&A costs include the costs of operating and maintaining research facilities, equipment, the libraries, and of providing administration at the university, college and department levels.

Significant reductions in the state appropriation to the University's General Education Fund (GEF) in recent years have made the recovery of F&A costs on sponsored agreements ever more crucial to the University's ability to provide the research infrastructure required for extraordinary and day-to-day research, scholarship and creative activity. Given the vital and growing importance of F&A cost recovery on grants and contracts, we have updated the UI policy on charging F&A costs to grants and contracts. This update emphasizes the importance of F&A recovery and clarifies the conditions under which a waiver of F&A costs may be obtained.

In brief, the policy requires that applications for external funding charge the federally negotiated allowable F&A cost rate on all sponsored projects regardless of funding source unless a sponsoring agency's written policy will not allow full recovery of F&A costs (for additional clarity on types of written policy that will be accepted, please see UI policy referenced below). Any additional requests for F&A rate reductions are discouraged because any reduction in F&A costs essentially constitutes a subsidization of the research enterprise by other components of the GEF. In rare instances in which a rate reduction should be considered, a request for a rate reduction must be considered and approved by the Assistant Vice President for Research (or designated alternate university official) prior to negotiating costs or price with sponsors. The UI full updated policy is located here.

Additional background regarding the calculation of F&A costs is available here. The UI's current federally negotiated F&A Rate Agreement is posted here.

After reviewing the policies, additional questions about F&A cost may be directed to:

How the rate is determined: Kirby Tenhulzen, University Financial Analyst, (33)5-0083;

  • How the rate is calculated once awarded: Audra Haddy, Associate Controller, Grant Accounting, (33)5-0827;
  • F&A Policy and requests for rate reduction: Associate or Assistant Director in the Division of Sponsored Programs designated as liaison for agency/sponsor application (33)5-2123;

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