Principal Investigators are responsible for including Facilities and Administrative (F&A or indirect) costs in proposals for sponsored projects funded by external entities unless an exception has been approved in advance.
The Office of Cost Analysis (OCA) sets F&A rates with the federal government based on formulas and negotiation processes set forth in the Uniform Guidance.
- must use the federally approved rates for all sponsored projects, unless an exception to policy has been granted in advance of proposal submission or it meets the University’s pre-approved criteria for a reduced rate; and
- may not offer or promise a reduced rate to a Sponsor in advance of receipt of an approved waiver.
Principal investigators can petition for such F&A reductions for an individual project. Colleges have the authority to approve most waivers; the Office of the Vice President for Research will make decisions on waivers that have broad institutional impact. See Administrative Procedure: Requesting Facilities and Administrative (Indirect) Cost Reductions for guidance. Waivers will not be approved for an entire type or class of project.
Indirect Cost Recovery (ICR), generated by F&A rates applied to external funds, is typically shared by the colleges substantially contributing to the work of a sponsored project and is typically also shared among departments contributing to the work of a sponsor project, usually in proportion to their contribution. Mandatory sharing of ICR is required when a project meets the thresholds outlined in Administrative Procedure: Sharing Indirect Cost Recovery Among Collaborating Collegiate Units. Units must document ICR sharing arrangements at time of proposal review and submission.
Reason for Policy
This policy has been established to meet the compliance standards set forth in OMB’s Uniform Guidance (2 CFR 200), which includes the cost principles for educational institutions. This document specifies that all costs incurred for the same purpose, in like circumstances, are treated only as either direct costs or F&A/indirect costs. Principal investigators and administrators involved in sponsored projects must comply with this policy in order to ensure that costs are properly charged and meet federal costing standards.
The policy and its associated procedures streamline the process for small projects and for many routine transactions as well as create a uniform understanding about how F&A should be shared when there are contributions from more than one college. A transparent, equitable way to allocate the ICR to contributing units is critical in promoting interdisciplinary projects.