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GIM 13 Supplement: Effective Date for F&A Rates and Provisional Rates

UNIVERSITY OF WASHINGTON

Office of Research
Office of Sponsored Programs

GRANTS INFORMATION MEMORANDUM 13

November 17, 2011

Effective Date

The effective period for rates is stated next to each rate within the F&A Rate Agreement. The date of the rate agreement itself represents the date the agreement is approved and final.

OMB Circular A-21 requires federal agencies to use the negotiated F&A rates in effect at the time of the initial competitive segment of an award. These rates should be used throughout the entire competitive segment of the project. A competitive segment is a period of years approved by the federal funding agency at the time of the award. The rate in effect at the beginning of the budget period should be used for the entire annual budget period.

The rates for supplemental awards (not included in the initial competitive segment), applied at the beginning of the supplement, will be in effect throughout the remainder of the competitive segment for the supplement.

Provisional Rates

When new F&A rates have not been established prior to the expiration of an existing F&A rate agreement, the federal government may approve the use of provisional rates on new awards until new F&A rates are negotiated. The approval of provisional rates is found within the F&A Rate Agreement.

Once F&A rates are negotiated, if new F&A rates are less than the provisional rates, the new F&A rates will be retroactively applied to all federally sponsored projects with a project date beginning on or after the effective date of the new rates. Additionally, all NIH supplements with a start date beginning on or after the effective date of the new rates will have the new F&A rates retroactively applied to the supplement. When new negotiated F&A rates are higher, no retroactive adjustments will be made.

In addition to the rates established with HHS-DCA, the University has determined rates applicable to some specialized studies and agreements. These rates are listed in the Table of Established F&A Rates and Bases for the University of Washington.

Example 1: Use of rates in effect at the time of initial competitive segment

Researcher applies for three years of funding from NIH for an on-campus research project, starting December 1, 2011. Within the proposed modular budget, she has built in the negotiated increase in on-campus rates as set forth in the University F&A rate agreement. The proposed budget is calculated using the rate in effect for an on-campus project at the time of the anticipated start date for year 1 (54%). She uses the rates in effect for an on-campus project at the anticipated budget year start dates for Years 2 and 3 (54.5%). Researcher does not pro-rate the F&A rate mid-budget year in the proposed budget:

  Year 1: 12/1/2011 - 11/30/2012 (FY012) Year 2: 12/1/2012 - 11/30/2013 (FY013) Year 3: 12/1/2013 - 11/30/2014 (FY014)
MTDC $250,000 $250,000 $250,000
F&A: Year 1: 54%, Years 2-3: 54.5% $135,000 $136,250 $136,250
Total $385,000 $386,250 $386,250
Example 2: Use of provisional rates

Researcher applies for five years of funding for on-campus research, starting July 1, 2011. In her proposed budget, she has built in the anticipated increase in on-campus rates as set forth in the University F&A rate agreement. Her project period extends past the effective period of the current F&A rate agreement. Per the rate agreement, she uses provisional rates for the years in which there is not an effective predetermined F&A rate. The provisional rates for fiscal years 2015 and 2016 are the same rates as those cited for fiscal year 2014 (54.5%).

  Year 1: 7/1/2011 - 6/30/2012 (FY012) Year 2: 7/1/2012 - 6/30/2013 (FY013) Year 3: 7/1/2013 - 6/30/2014 (FY014) Year 4: 7/1/2014 - 6/30/2015 (FY015) Year 5: 7/1/2015 - 6/30/2016 (FY016)
MTDC $200,000 $210,000 $220,000 $230,000 $240,000
F&A: Year 1: 54%, Years 2-3: 54.5% $108,000 $114,450 $119,900 $125,350 $130,800
Total $308,000 $324,450 $339,900 $355,350 $370,800
Example 3: New negotiated F&A rates higher than provisional rates

Researcher applies for five years of funding for on-campus research, starting July 1, 2011. In her proposed budget, she has built in the anticipated increase in on-campus rates as set forth in the University F&A rate agreement. Her project period extends past the expiration of the current F&A rate agreement. Per the rate agreement, she must apply the provisional rates to Years 4 and 5. She uses the same rates as those cited for fiscal year 2014 for fiscal years 2015 and 2016 (54.5%, see Example 2). She receives the award for the full amount, with a start date of July 1, as proposed.

In October 2014, the University finalizes negotiations with HHS-DCA and a new rate agreement, effective July 1, 2014, is issued. This rate agreement establishes the on-campus rate as 56% MTDC. The researcher is currently in Year 4 of her award. No retroactive increase is made to the F&A rate for her award for fiscal years 2015 and 2016 because per University policy, an increase in the F&A rate will not be applied retroactively to an existing award (see "Provisional Rates" above).

The budget remains the same as set out in Example 2.

Example 4: New negotiated F&A rates less than provisional rates / Project Start date precedes effective date of new negotiated F&A rates

Researcher applies for five years of federal funding for on-campus research, starting October 1, 2011. She has built in the anticipated increase in on-campus rates as set forth in the University F&A rate agreement. Her project period extends past the expiration of the current F&A rate agreement. She applies the provisional rates to Year 4 and 5 (54.5%, see Example 2). The federal sponsor makes an award, applying the F&A rates in effect at the time of the start of the project, which have not changed since time of proposal.

Towards the end of FY016, a new rate agreement is negotiated. This agreement establishes the on-campus rate as 53%, effective July 1, 2015. Researcher is currently in Year 5 of her project, which has a budget start date of October 1, 2015. The new rate of 53% for on-campus research is not retroactively applied to the last budget year of the project, because the project start date (October 1, 2011) precedes the effective date of the new negotiated F&A rate.

The budget remains the same as set out in Example 2.

Example 5: New negotiated F&A rates less than provisional rates / Project Start date after effective date of new negotiated F&A rates

Researcher applies for two years of federal funding for on-campus research, starting October 1, 2014. She has built in the anticipated increase in on-campus rates as set forth in the University F&A rate agreement. Her project period extends past the expiration of the current F&A rate agreement. According to the rate agreement, she uses the same rates as those cited for fiscal year 2014 for fiscal years 2015 and 2016 (54.5%). The federal sponsor makes an award, applying the F&A rates in effect at the time of the start of the project, which have not changed since time of proposal.

In the summer of FY015, a new rate agreement is negotiated. This agreement establishes the on-campus rate as 53%, effective July 1, 2014 - June 30, 2017. Researcher is currently in Year 1 of her project, which had a start date of October 1, 2014. The new rate of 53% for on-campus research is retroactively applied to the project because the project start date of October 1, 2014 is after the effective date of the new negotiated F&A rate. She re-budgets in light of the new rate. The difference is put into direct costs (using formula).

  Year 1: 10/1/2014 - 9/30/2015 (FY015) Year 2: 10/1/2015 - 9/30/2016 (FY016)
MTDC $200,000 $210,000
F&A: Years 1-2: 53% $106,000 $111,300
Total $306,000 $321,300

Questions on the application of F&A rates during the life of a sponsored project? Contact the Office of Sponsored Programs, (206) 543-4043 or osp@uw.edu.