Facilities & Administrative Costs
Facilities & Administrative (F&A) costs, frequently referred to as indirect costs, are expressed as a percentage applied to sponsored projects in order to recover allowable overhead costs associated with conducting projects at UAF.
The university negotiates an indirect cost rate agreement with the Office of Naval
Research to recover F&A costs on sponsored projects. Facilities and administrative
(F&A) cost recovery rates are based on actual costs the university has incurred. F&A
recovery supports general institutional costs that are incurred for common and joint
objectives. These are real costs that cannot be readily identified to a particular
project or activity, so they are charged indirectly.
It is UAF's policy to charge our full negotiated F&A rate on all projects, unless a sponsor has restrictions on the recovery of F&A costs. If a sponsor restricts F&A recovery, the dean or director of the department must decide whether or not to approve the proposal submission to that sponsor. If a reduced F&A rate is required by the sponsor, the sponsor's published F&A rate policy must be included with the proposal when it is submitted to OGCA for review. Note that if a sponsor allows the budgeting of UAF's full F&A rate, a voluntary waiver to reduce the rate below the negotiated rate will not be accepted.
Any F&A under-recovery (when rates fall below negotiated rates) is paid according to standing UAF F&A under-recovery procedures. Please note that while the under-recovery policy is still in place, UAF now uses a 60/40 distribution plan for all awards and activity types, regardless of the rate used.
The Office of Naval Research (ONR) is the university's cognizant federal agency for indirect cost rate negotiation. The Department of Health and Human Services (DHHS) also negotiates indirect cost rates with universities; however, UAF does not have an agreement with DHHS. If you have questions about UAF's indirect cost agreement, contact the UA Office of Cost Analysis.
UAF's F&A rate negotitation agreement for:
- Sponsored research
- Other sponsored activities
- Sponsored training/instruction
can be found at UA Office of Cost Analysis
*This includes proposals to DOD or its sub-agencies that will utilize a grant or cooperative agreement mechanism.
- UAF's provisional F&A rate for DOD-funded contracts can be found at UA Office of Cost Analysis
If you are preparing a sponsor's form that requires indirect cost rate information, provide the following information:
Office of Naval Research
Shea D. Kersey, Contracting Officer
875 North Randolph Street, Rm. 373
Arlington, VA 22203-1995
Phone: (703) 696-2055
- Add up all project costs to get your (TDC) total direct costs.
- Subtract tuition, equipment with an acquisition cost of $5,000, participant support costs, rental costs*, and subaward costs in excess of $25,000 from your TDC. F&A cannot be charged on these items. The remaining amount is known as your (MTDC) or modified total direct costs.
- (MTDC)(50.5%) = F&A costs
- F&A costs + TDC = Total Project Request
*Note that rental costs are now excluded from MTDC under Uniform Guidance definition and per UAF's negotiated F&A agreements with ONR. Please see the 08/04/2016 SW memo about rental cost codes excluded from MTDC when using the 4MTDC F&A cost code in Banner.
There are three main F&A activity types under UAF's negotiated agreement with ONR. They are: (1) "Sponsored Research," (2) "Sponsored Instruction and Training," and (3) "Other Sponsored Activities." It is important to choose the correct activity type for a proposal, since it determines which F&A rate to use. It is also important to remember that the activity is what occurs during the project period and not for what might result after the project period. The sponsor is providing support for the activity at the time of the project, and therefore the F&A activity type should reflect what occurs during the project period only. When in doubt, contact OGCA for guidance.
Sponsored Research :
"Sponsored Research" consists of "all research and development activities that are sponsored by Federal and non-Federal agencies and organizations," according to Uniform Guidance, 2 CFR 200, Subpart F, Appendix III. This includes "activities involving the training of individuals in research techniques (commonly called research training) where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function." Sponsored research is combined with university research under the function of organized research for F&A purposes.
Some Examples of "Sponsored Research" Activities (list not all inclusive - when in doubt, ask OGCA):
- Basic and/or applied research activities;
- Maintenance of facilities, equipment and/or operation of a facility which will be used for research;
- Training of individuals in research techniques (research training);
- Publishing research results; or
- Data collection, evaluation, analysis and/or reporting.
Sponsored Instruction and Training :
"Sponsored Instruction and Training" is defined as "specific instructional or training activity established by grant, contract, or cooperative agreement," for federal or non-federal sponsors, according to Uniform Guidance, 2 CFR 200, Subpart F, Appendix III. Sponsored Instruction includes agreements which support curriculum development as well as teaching/training activities (other than research training) whether offered for credit toward a degree or certificate, on a non-credit basis, or through regular academic departments or by separate divisions, summer school, or external division.
Some Examples of "Sponsored Instruction and Training" Activities (list not all inclusive - when in doubt, ask OGCA):
- Teaching (instructing) UAF students, faculty, or staff;
- Curriculum development projects at any level, including evaluation of curriculum or teaching methods. Such evaluation may be considered "research" only when the preponderance of activity is data collection, evaluation, and reporting;
- Projects involving UAF students in community service activities for which they are receiving academic credit; or
- Fellowship support for pre-doctoral and post-doctoral training activities, which may include grants to fund dissertation work and travel in relation to a dissertation.
Other Sponsored Activities (OSA) :
"Other Sponsored Activities" consist of "programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research," according to Uniform Guidance, 2 CFR 200, Subpart F, Appendix III.
Some Examples of "OSA" (list not all inclusive - when in doubt, ask OGCA):
- Performing a service (e.g., production of goods or materials) for an outside entity, unless UAF is a subawardee on the entity's prime award that is primarily for research or instruction/training;
- Travel grants;
- Support for conferences, seminars, or workshops;
- Support for UAF public events;
- Support for students, staff, or teachers in elementary or secondary schools, or the general public, through outreach-related activities;
- Support for projects involving UAF students in community service activities for which they are *not* receiving academic credit;
- Support for projects pertaining to museum or library collections, acquisitions, bibliographies, or cataloging;
- Programs to enhance institutional resources, such as computer enhancements, etc.; or
- Health services projects.
Per UA's current negotiated F&A agreement: "Off-Campus rates apply to sponsored projects where more than 50% of the university effort is conducted off-campus. Off-Campus is defined as a facility which is not owned or leased by the institution, a facility leased by the institution where the lease costs are charged as direct costs to the award, or a temporary worksite (i.e. field location)."
Projects that meet these criteria should submit proposals at a reduced F&A rate (26% MTDC) to funding sponsors only when the authorized administrative organizational representative (AOR) or the designee at the respective MAU has reviewed and agrees that the project meets the Off-campus criteria as defined in the ONR negotiated agreement.
Only Off-campus projects that benefit from university facilities should be including the facilities component in the F&A rate for those projects. Otherwise projects meeting the above criteria should use the administrative rate of 26.0%.
For research sponsored by the State of Alaska, the F&A rate is 25% applied to the MTDC base. For instruction, training, and other sponsored activities, the F&A rate is 12% applied to the MTDC base. Please see the Memorandum of Understanding between the State of Alaska and the University of Alaska.
(Note: If UAF is a subrecipient on a State of Alaska proposal to a Federal sponsor, the Federal F&A rates still apply. This State MOU only is intended for award decisions that the State has control over. Read the MOU carefully to determine how it applies to your project.)
The State F&A rates also apply on proposals submitted to the following public corporations that fall under the State of Alaska:
- Alaska Aerospace Corporation
- Alaska Energy Authority
- Alaska Gasline Development Corporation
- Alaska Housing Capital Corporation
- Alaska Housing Finance Corporation
- Alaska Industrial Development and Export Authority
- Alaska Mental Health Trust Authority
- Alaska Municipal Bond Bank Authority
- Alaska Natural Gas Development Authority
- Alaska Permanent Fund Corporation
- Alaska Railroad Corporation
- Alaska Seafood Marketing Institute
- Alaska Student Loan Corporation
- Knik Arm Bridge and Toll Authority
- Northern Tobacco Securitization Corporation
For proposed projects that involve more than one UAF unit:
- Each unit should use their F&A rate, to ensure that each unit receives the F&A distribution for their portion of work. Note that sponsor guidelines and requirements are the primary consideration in deciding if it is appropriate to use multiple rates.
- The proposal budget should combine all line items for the units involved with separate MTDC lines for each department's F&A recovery, using the Multi-Unit tab on the OGCA spreadsheet.
- A separate spreadsheet budget for each unit and a combined overall budget is strongly recommended to show the breakdown of work and funds requested.
- For NSF proposals, there will be a separate line for each rate and base on the NSF budget form section I (Indirect Costs).
For proposed projects that involve more than one activity/task:
- If multiple activities or tasks can be easily identified in the project, then the corresponding F&A rate can and should be used for each separate task. The same goes for personnel that may be exclusively involved in a specific component and not another. For example, a project may have a research component and also contain an educational or outreach component. The research component would use the sponsored research F&A rate, and the educational piece would use the sponsored training/instruction rate. An outreach component may use the Other Sponsored Activity rate. See "F&A Activity Types" above for examples of each type. Note that sponsor guidelines and requirements are the primary consideration in deciding if it is appropriate to use multiple rates.
- The proposal budget should combine all line items for all activities with separate MTDC lines for each activity's F&A recovery, using the Multi-Unit tab on the OGCA spreadsheet.
- A separate spreadsheet budget for each activity and a combined overall budget is strongly recommended to show the breakdown of work and funds requested.
- For NSF proposals, there will be a separate line for each rate and base on the NSF budget form section I (Indirect Costs).
Note: An MAU cannot be a subaward in another MAU's proposal. The UA System is considered one organization with a single accounting system and therefore does not have an internal subaward mechanism. Therefore, UAF cannot be a subaward to UAA or UAS, UAA cannot be a subaward to UAF or UAS, and UAS cannot be a subaward to UAF or UAA.
Procedures for Proposals with Multiple MAU Involvement:
- Each MAU enters their portion into Banner FRAPROP. See "Banner FRAPROP Entry". This means each portion will have its own 'S' number.
- Each MAU should use their F&A rate for their portion of the proposal.
- The proposal budget should combine all line items for the MAUs involved, with separate MTDC lines for each MAU's F&A recovery.
- A separate spreadsheet budget for each MAU and a combined budget should be included to show the breakdown of work and funds requested.
- Each MAU must submit a signed routing form from their campus to the lead MAU to ensure proper approvals. Note that this is done on each MAU's respective form.
- For NSF proposals, the easiest and most compliant solution is to prepare a collaborative dual submission: each MAU's budget is entered separately, the proposals are linked in FastLane, and awards are made to each MAU separately for their portion of work.
An F&A waiver can be requested under the following circumstances:
- When a unit wishes to request waiver of the 9% under-recovery fee (URF), if the project's F&A rate is 9% and below. If a waiver is not requested, the unit is automatically responsible for paying the URF. See the section about
- A major purchase is being considered that is potentially capitalizable under UA Capitalization Guidelines. If unsure, please consult OGCA.
- Under Uniform Guidance, 2 CFR » 200.68, a major purchase is being considered that potentially creates an inequity in the distribution of indirect costs and may need to be exluded from MTDC. Note that items of this nature require approval by UAF's cognizant agency, the Office of Naval Research.
Note that if a sponsor allows the budgeting of UAF's full F&A rate, a voluntary waiver to reduce the rate below the negotiated rate will not be accepted.
An F&A Rate Exception (FARE) form should be completed as soon as the issue of potentially reducing any F&A recovery arises, since these requests require additional review time and impact the bottom line of a proposal budget. F&A waiver requests are reviewed by OGCA in coordination with the Vice Chancellor for Research/ Vice Chancellor for Administrative Services, and approved or denied as appropriate.
Special note: The process of waiving vendor service contracts to treat the F&A as subawards (limited to the first $25,000 of the contract) was rendered unallowable by the implementation of Uniform Guidance on December 26, 2014 and subsequently eliminated from practice at UA. Please see the UA Controller's memo for more information.
Understanding the Facilities and Administration (F&A) Cost Calculation
Why Is F&A Recovery So Important? Explaining F&A to Faculty
Please see the following series of videos published by NCURA covering the topic of
Part 1: Explaining to Your Faculty that F&A is Mechanism for Reimbursement of Costs that Have Already Been Incurred and How the F&A Rate is Calculated
Part 2: A Simple Way to Explain the Federal Research Dollar Effective F&A Rate to Your Faculty
Part 3: Explaining F&A to Your Faculty: The F&A Rate is a Weighted Average Across the University
Part 4: Explaining F&A to Your Faculty: Last Thoughts on Explaining the Benefit of F&A to Your Faculty