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Facilities and Administrative (F&A) Costs (Indirect Costs)

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Similar to the overhead costs of a business, facilities and administrative (F&A) costs are the basic expenses involved in running the UW's research program. This factsheet answers some of the more common questions about F&A costs.

Are F&A costs the same as indirect costs?
Yes. In 1996, the federal government replaced the term indirect costs with F&A costs, but the two terms have the same meaning.

What are the differences between direct costs and F&A costs?
Direct Costs are funds used by the Principal Investigator to pay for the costs of conducting the research including:

F&A Costs are funds used to maintain the University’s research infrastructure, including:

How are the F&A rates calculated and negotiated?
F&A cost rates are based on the UW’s actual operating costs. Using guidelines provided by the federal government, the UW assesses its F&A costs on a regular basis and allocates these costs to different activities, such as research or teaching, proportionate to the benefit provided. Once all F&A costs are determined, the University determines the portion of costs that are related to research. This information is then reviewed by the Federal government and F&A cost rates are negotiated approximately every 4-5 years.

What are the current F&A cost rates for research activities?
See GIM 13 (www.washington.edu/research/osp/gim/gim13.html) for current F&A rates for various types of research projects. The current F&A rate for most federally funded research is 55.5% for on-campus research, and 26% for research conducted off-campus. F&A cost rates are negotiated periodically with the federal government and are based on the UW's actual operating costs, except when capped by federal regulation.

How are a research project's F&A costs calculated?
The basic procedures for determining the F&A costs are:

  1. Calculate the grant’s Total Direct Costs (TDC), which equals the sum of all direct costs, including salaries, supplies, equipment, etc.
  2. Calculate exemptions, which can include items such as off-campus building rental, tuition and a portion of sub-contracts. See GIM 6 (www.washington.edu/research/osp/gim/gim6.html) for more information.
  3. Deduct exemptions from TDC to determine Modified Total Direct Costs (MTDC)
  4. Multiply the MTDC by the UW’s current F&A rate to determine F&A costs.
  5. Add the TDC to F&A costs to calculate Total Project Costs.
    TDC – Exemptions = MTDC
    MTDC x F&A RATE = F&A Costs
    TDC + F&A Costs = Total Project Costs

Can an individual researcher negotiate different F&A rates on a project?
No. However, if the written guidelines for the RFP include a statement about the F&A rates the agency will pay or if such a statement is available on the agency website, the University can abide by that policy.

What if I am applying for a non-federal grant that pays less than the full F&A rate?
Discuss the situation with your Chair and get his or her approval before you apply. Include the approval, and any other relevant information, with the GC-1 form that you submit to the Office of Sponsored Programs.

Why should my grant pay F&A costs?
Faculty members may feel that when they successfully compete for a grant, the F&A cost component is something that they are donating to the University. However, the F&A costs reimburse the institution for overhead costs related to the project and in most cases, don’t cover all of these costs.

What do F&A costs reimbursements pay for?
In a typical year, roughly half of the funds will be used to support UW research facilities, and the other half will be used to support central and departmental research administration. About one third of the total F&A dollars received by the University are returned to the units to support administration of research projects managed within Departments, Schools and Colleges. These funds are used by Deans and Chairs to hire fiscal specialists, secretaries and other staff who assist faculty with research-- including grant proposal preparation and budget management.

pie chart of f&a costs The UW received approximately $187 Million in F&A costs reimbursements in FY 2006. The pie chart shows how these funds were used. Seventeen percent of the F&A funds were retained within the central administration to help defray the costs of centralized research administration and compliance services, such as Human Resources, Payroll, Purchasing, Office of Research, Office of Sponsored Programs and the Human Subjects Division. Of the 52% spent on Facilities, a little more than half was spent on operations and maintenance of existing research space, including paying for such costs as utilities and janitorial services. The remainder pays for repairs and renovation of buildings, ‘debt service’ (interest) on new buildings, major equipment repair and replacement, and support for the libraries.

 

How do F&A reimbursements benefit my department?
The PI’s school or college generally receives about one-third of F&A costs through the Research Cost Recovery (RCR) allocation. These funds are used at the discretion of the Dean and Chairs to support research in their units.

How are F&A cost reimbursements related to University expenditures?
When the UW develops its budget for a biennium, it starts with an estimate of the total revenues available for that biennium, including State funding, tuition, F&A cost reimbursement and interest and investment income. All these funding sources are combined to pay the UW’s operating expenses, including F&A costs related to research.