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Facilities and Administrative (F&A) Cost Rates

Summary

The federal Office of Management and Budget (OMB) guidance entitled Uniform Administrative Requirements, Cost Principles, and Audit Requirements , defines F & A costs as "those incurred for common or joint objectives and therefore not identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."

Exceptions to the Negotiated F&A Cost Rates

University of California policy requires the full recovery of direct and indirect (F&A) costs whenever possible. Exception requests are considered for non-profit sponsors, a few situations involving for-profit sponsors and foreign governments, and a Campus Vital Interest. Class exceptions can be approved based upon sponsor policy. Exceptions based on Campus Vital Interest and the SBIR/STTR Phase 1 F&A Rate Reduction program are individual exceptions. See Research Policy 483-4: Policy on Full Cost Recovery and Facilities & Administrative (F&A) Cost Rate Waivers or Reductions for a description of the categories eligible for a Vital Interes waiver.

Investigators should submit the justification for a Campus Vital Interest waiver or a reduction of F&A costs along with the project budget to the Sponsored Projects Officer or Industry Sponsored Research unit in Applied Innovation (for research projects funded by for profit sponsors) assigned to your unit for review and consideration. Likewise, questions about this process should be submitted to the appropriate area (Sponsored Projects or Applied Innovation) depending on the public/private nature of the sponsor.

F&A Cost Rates Effective July 1, 2011

ORGANIZED RESEARCH
Effective Period On-Campus Off-Campus
July 1, 2011 through June 30, 2012 53.0% MTDC 26.0% MTDC
July 1, 2012 through June 30, 2013 53.5% MTDC 26.0% MTDC
July 1, 2013 through June 30, 2014 54.0% MTDC 26.0% MTDC
July 1, 2014 through June 30, 2016 54.5% MTDC 26.0% MTDC
OTHER SPONSORED ACTIVITIES
Effective Period On-Campus Off-Campus
July 1, 2011 through June 30, 2016 37.5% MTDC 26.0% MTDC
INSTRUCTION
Effective Period On-Campus Off-Campus
July 1, 2011 through June 30, 2016 46.0% MTDC 26.0% MTDC
CLINICAL TRIALS
Effective Period On-Campus Off-Campus
March 1, 2007 and beyond* 26% TDC 26% TDC
State of California Agreements (Effective January 1, 2016)
Effective Period On-Campus Off-Campus
May 9, 2003 through June 30, 2018 25% MTDC** 25% MTDC**
July 1, 2018 through June 30, 2019 30% MTDC** 25% MTDC**
July 1, 2019 through June 30, 2020 35% MTDC** 25% MTDC**
July 1, 2020 and beyond 40% MTDC** 25% MTDC**

**The UC Office of the President (UCOP) approved the use of this rate. This is the minimum rate applicable to State of California agreements. Federal funds flowing through a State agency will use the federally negotiated rates. Proposals to California Institute for Regenerative Medicine and the California Energy Commission PIER and EPIC programs will use the rates published in the funding announcement. Unless a State agency program has a published F&A rate policy stated in a funding announcement or federal regulation (applicable to federal flow-through funds), UCI must use the UCOP approved rate. The F&A rate utilized in the proposal will remain in effect for the life of the project (e.g., all years will include the F&A rate in effect for the initial budget year). An amendment to the award that includes additional money and time is the same as a new agreement for the purposes of determining the appropriate F&A rate. As such, a new budget with the appropriate indirect cost rate in effect at the time of the amendment must be provided to the State agency.

Applying and Calculating F&A Cost Rates in Proposal Budgets

The above rates must be used when estimating F&A costs in proposals to extramural sponsors. Use of a rate other than those identified above requires approval of a waiver request.

To calculate F&A costs in Clinical Trial budgets – Multiply the total of all budget items (Total Direct Cost, TDC), excluding UC campus subcontracts, by the Clinical Trial F&A rate. 

For all Other Projects - Calculate the Modified Total Direct Cost (MTDC) base by subtracting the excluded costs listed below from the budgeted Total Direct Costs:

  • equipment and capital expenditures;
  • patient care costs for services provided by a hospital or clinic, including UCI Medical Center, but not the laboratories of academic departments or organized research units or salaries of personnel providing the services;
  • rental, lease and maintenance costs of off-campus space;
  • tuition and fee remission;
  • financial aid paid directly to University students, but not as salaries and wages, when allowable under the terms of the award;
  • subawards issued to other UC campuses; and
  • the portion of each non-UC subaward that is in excess of $25,000. Simply stated, UCI indirect costs are assessed on the first $25,000 only of each sub-award. Renewal of a prime award generally requires the issuance of a new subaward, hence indirect costs are charged to the first $25,000 of the renewed subaward. The indirect costs charged by a subaward recipient are not limited by this exception.

Then, multiply the result (MTDC base) by the appropriate F&A cost rate to find the F&A cost amount.

CIRM Proposals

When completing the Facilities Costs Page of a CIRM research application package, specific rates should be applied to Category A and Category B(1) (see worksheet with breakdown of rates).

Projects that utilize space in the CIRM funded facility should exclude Category B(1) rates from the CIRM application

Definitions

Organized Research - All research and development activities of an institution including sponsored research. Sponsored research includes all research and development activities that are sponsored by Federal and non-Federal agencies and organizations. This term 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.

Instruction - Instruction means the teaching and training activities of an institution, except for research training as described above. Instruction includes all teaching and training activities, whether they are offered for credits toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division. Instruction also includes sponsored instruction and training which means specific instructional or training activity established by grant, contract, or cooperative agreement.

Other Sponsored Activities - This means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects, and community service programs.

Clinical Trial - The controlled, clinical testing in human subjects of investigational new drugs, devices, treatments or diagnostics, or comparisons of approved drugs, devices, treatments or diagnostics, to assess their safety, efficacy, benefits, costs, adverse reactions, and/or outcomes.

Such studies may be conducted under an industry-developed protocol or an investigator-developed protocol. These studies are most often conducted in conjunction with obtaining new drug (under Phase I, II, III, or IV) or device approval from the U.S. Food and Drug Administration, although they can be designed with the sole purpose of collecting and analyzing data about approved drugs or devices in order to contribute to medical knowledge about the treatment of a disease or medical condition. In all cases, the study must include the prospective enrollment of human subjects and the controlled testing of a drug, device, or diagnostic under an approved protocol.

Federally-funded projects, projects funded by interest groups, charities or the State of California, retrospective chart reviews, analysis of existing medical data and records, laboratory research, and animal studies are not categorized as clinical trials for purposes of applying the clinical trial F&A cost rate.

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

Facilities and Administrative Costs - F&A costs are those 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.

Modified Total Direct Costs (MTDC) Base - The MTDC base is the total direct costs for a project less those budget items that are excluded by agreement with the audit agency. The excluded costs are: equipment, construction, alterations and renovations, hospital or clinic charges for patient care, space rental or lease, tuition and fee remission, scholarships, and the amount that exceeds $25,000 of any subaward. See the Calculation section for more information.

Off-Campus Projects - Projects that are based at facilities not owned, or leased and maintained by the University. However, if the project is conducted in leased space and the lease costs are directly charged to the project, the off-campus rate must be used. If the project involves both on-campus and off-campus sites, either the on-campus or off-campus rate generally should be applied, consistent with where the majority of the work is to be performed as measured by salary cost. The use of both on- and off-campus rates may be justified if both rates can be clearly identified with a significant portion of project salaries, meaning 25% or more of total salary/wage costs and the project's total salary/wage costs exceed $250,000.

Project Period - Project period means the total time for which support of a program has been approved, initially or by a renewal award. As used by the Public Health Service, Project Periods consist of one or more annual budget periods with funding for future years beyond the initial budget period provided on a non-competing basis.

Total Direct Costs (TDC) - TDC is the total of all direct costs budgeted for a project.

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