Supersedes: GIM 13, April 23, 2007

Purpose

This policy documents Facilities and Administrative (F&A) rates applicable to sponsored projects.

The Federal Office of Management and Budget (OMB) Circular A-21 establishes principles for determining costs applicable to grants, contracts, and other agreements between the federal government and educational institutions. Circular A-21 defines criteria for determining both direct and F&A costs. In addition, Circular A-21 establishes a mechanism for higher education institutions to calculate, negotiate, and recover F&A costs from federal and other sponsors.

For more detailed information on the mechanics of the F&A rate calculation, please refer to the Primer on Facilities and Administrative Costs. For more detailed information on the University's Costing Policy, please refer to GIM 23.

Background

Direct costs are those costs that can be identified specifically with a particular sponsored project with a relatively high degree of accuracy. F&A costs are those costs incurred for a common or joint objective that cannot be identified readily and specifically with a particular sponsored project. F&A costs were historically referred to as "indirect costs."

The University Financial Management Division of Management Accounting and Analysis (MAA) periodically develops and negotiates the University's F&A proposal with the Department of Health and Human Services, Division of Cost Allocation (HHS-DCA). F&A cost rates are based on the University's actual operating costs. Using Circular A-21, the University 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 then determines the portion of those costs that are attributable to research. This information is reviewed by the federal government. F&A cost rates are negotiated every 4 to 5 years. This becomes the F&A Rate Agreement.

Persons / Offices Affected

Principal Investigators, Research Personnel, Research Administration Personnel, Academic Unit Chair, Dean's Office, eGC1 Reviewers, Office of Sponsored Programs, Grant and Contract Accounting, Management Accounting and Analysis, Assistant Vice Provost for Research, Office of Planning and Budgeting.

University Policy

The University calculates and includes F&A costs in all sponsored project budgets as set out in the F&A Rate Agreement, unless one of the exceptions below apply:

Use of a listed exception does not require an F&A waiver by the Assistant Vice Provost for Research.

In limited situations, with advance approval, the Assistant Vice Provost for Research may allow the use of a lower rate if one of the above exceptions is not applicable. An application for an F&A waiver must be made in the form required by the Office of Sponsored Programs and included with the sponsored project proposal materials.

The University may charge an F&A rate that is higher than the applicable federal rate for a sponsored program funded by a for-profit entity, and in all cases, will not charge F&A rates that are lower than those applied to federally sponsored projects.

F&A rates are applied to the cost base associated with the location and type of project as specified in the F&A Rate Agreement unless a sponsor has a stated cost base in the official program announcement. When a non-federal sponsor's policy does not specify a base type, the Total Direct Costs (TDC) cost base applies.

The Table of F&A Rates and Base Types for the University of Washington provides a summary of the negotiated rates within the current F&A Rate Agreement for the University as well as other established rates for some specialized studies and agreements.

Procedures and Guidance

In order to implement the University policy on F&A rates, it is necessary to follow the procedures and guidance outlined in this section.

• Effective Date for F&A Rates and Provisional Rates
• Types of Institutional Activity
• Locations of Activity
• Activity at Two or More Locations
• Base Calculation
• Subcontracts and F&A
• Projects with Washington State Governmental Agencies
• Exceptions to University Policy on F&A Rates

Responsibilities

Assistant Vice Provost for Research

• Evaluates F&A Waiver Requests and makes recommendations to Principal Investigator, Department Head, Associate Dean, or Vice Provost for Research regarding F&A Waiver Requests.
• Reviews policy and underlying procedures and guidance on a periodic basis and in response to F&A rate changes or federal regulatory changes.

Dean

• Establishes effective processes and controls to ensure compliance with this policy.
• Communicates these practices to all responsible employees within the College, School and departments.

Department Chair

• Establishes effective processes and controls to ensure compliance with this policy.
• Communicates these practices to all responsible employees within the department.

Principal Investigators

• Prepares proposal budgets and justifies proposed expenses.
• Determines whether a request to waive F&A costs should be made, and when such requests are appropriate, prepares the F&A waiver Request and forwards to the Assistant Vice Provost for Research, for review.
• Adjusts the proposal budget as needed to accommodate the approved rate waiver or to charge full applicable F&A costs if an F&A waiver approval cannot be granted by the sponsor's deadline.
• Ensures the appropriateness of all charges on sponsored projects.
• Ensures the consistent application of direct costing practices to federally sponsored projects for which he/she is the PI, as set out in GIM 23.

Office of Sponsored Programs

• Assists in interpretation of federal guidance, such as OMB Circular A-21.
• Develops and maintain policies and procedures in accordance with the regulations.
• Maintains record of sponsored project proposal and associated sponsors' published F&A policy documents.
• Creates funding action when new sponsored projects are established, using the applicable F&A rate awarded to the University.
• Communicates with Sponsor if there are questions about the F&A rate or base applicability to a particular project.

Unit Administrator/Fiscal Lead

• Assists principal investigators in preparing proposal budgets, justifying expenses, charging costs and tracking expenses.
• Reviews sponsored project proposals for justification of direct costs requested, especially when costs normally charged as F&A costs are proposed as direct costs.
• In conjunction with principal investigators, maintains financial records for reviews by internal or external auditors.

Grant and Contract Accounting

• Establishes sponsored program budget numbers based on funding actions from OSP.
• Maintains system for charging UW F&A on sponsored program budgets, consistent with the UW F&A rate agreement and the F&A information provided on the funding action or other administrative action from OSP.
• Maintains list of object codes that are excluded from base type codes in the financial system.
• Review of post-award fiscal compliance on individual sponsored projects, including consistency with F&A rate and base for the project.

Management Accounting and Analysis

• Allocates costs to different University activities, based on data collected through surveys and other University sources.
• Reviews and prepares F&A rate proposal.
• Negotiates F&A rate agreement with HHS-DCA.

Vice Provost for Research

• Approves or denies F&A Waiver Requests that are strategic in nature and notifies investigator, department head, academic research associate deans, and Assistant Vice Provost for Research, consulting with others as needed.

Definitions

Affiliated organization

Independent organization with which the University has a business relationship. Examples include Seattle Children's and Fred Hutchinson Cancer Research Center.

Capital expenditures

Building alterations or renovation costs over $25,000.

Circular A-21

Uniform federal regulations in regards to charging of costs to grants, contracts, and other agreements with educational institutions.

Cost Base

Consists of project direct costs that are charged Facilities and Administrative (F&A) costs.

Direct Costs

Those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Equipment

Tangible nonexpendable personal property having a useful life of more than one year, and an acquisition cost of $2000 or more per unit.

Facility & Administrative (F&A) Costs

Costs that are 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.

F&A Rate Agreement

The rates and associated cost basis agreed to between the University and the Department of Health and Human Services, Division of Cost Allocation (HHS-DCA). Please see the Table of Established F&A Rates and Bases for the University of Washington for a summary.

Fellowships

Awards that consist of a stipend payment from the sponsor to an undergraduate, graduate, professional or post-doctoral student.

Indirect Costs (IDC)

See Facility and Administrative Costs

Industry Sponsored Clinical Trial

A human subjects research study funded by industry, the primary purpose of which is to assess the safety and/or efficacy in humans of a drug, device, diagnostic, treatment, preventive measure, or similar intervention through testing of the intervention on patients in a clinical setting.

Modified Total Direct Costs (MTDC)

All salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs.

Non-Qualifying Sponsor Projects

A sponsored project that supports a mutual exchange involving the University and a specific sponsor rather than the general sharing of knowledge by multiple members within a Research Affiliate Program (RAP).

Non-profit

A tax-exempt organization operating under section 501(c)(3) of the Internal Revenue Code.

Patient Care

Both inpatient and outpatient University hospital charges but not laboratory charges assessed through cost centers even though the laboratory results may be used for patient care. Outpatient travel and volunteer incentive payments are subject to F&A Costs.

Research Affiliate Programs (RAP)

Designed to facilitate the transfer of knowledge to society by addressing specific problems shared by multiple industry partners. Supported by corporate sponsorship, these programs provide an avenue for industry to contribute to and sustain research and teaching in University departments and programs of interest. Corporate members typically attend annual meetings, receive copies of reports and publications, and have opportunities to recruit students.

Rental Costs

Costs associated with leased facilities such as rent, utilities and maintenance.

Salary & Wages

A base type that is used for some federal programs. Salary & Wages are the direct salaries and wages including vacation, holiday and sick pay and other paid absences but excluding other fringe benefits.

Scholarships

Funding that covers all or a portion of the costs of education under conditions specified by the sponsor. Scholarships may not represent either payment for employment services or for research that is mostly for the University's benefit.

Sponsored Project

An exchange transaction between the University and the sponsor that is not a purchase or sale of goods or services or "work for hire" arrangement but instead is a mutual exchange involving the University and a sponsor.

Subgrant or subcontract

binding legal contract between the University and another institution regarding completion of a portion of a sponsored project.

Total Direct Costs (TDC)

A base type that is used for sponsored projects. TDC are all costs directly charged to a sponsored project.

Trainee Stipends

The amounts paid to graduate and postdoctoral individuals under fellowships and training grants in accordance with pre-established levels to provide for the individuals' living expenses during the period of training, where there is no employer/employee relationship.

Tuition

Tuition charges paid to the University of Washington (including the operating fee portion of tuition paid on behalf of Graduate Assistants).

Related Resources

Contacts

Content Creator

Office of Sponsored Programs
4333 Brooklyn Ave NE | Box 359472
Seattle, WA 98195-9472 | (206) 543-4043 | Fax 685-1732 | Contact Us
Modified: May 1, 2013