Facilities and Administrative (F&A) Costs

Facilities and Administrative (F&A) Costs

Office of Sponsored Programs Guidance Facilities and Administrative (F&A) Costs

Facilities and Administrative (F&A) Costs

Facilities and Administrative costs are real costs incurred by the Schools/Centers and institution for common or joint objectives in support of sponsored research and activities, but cannot be directly identified with a specific grant or contract. The costs result from shared services such as libraries, physical plant operation and maintenance, utility costs, general costs, departmental, units/school and sponsored projects’ administrative expenses, and depreciation for buildings and equipment are real costs built into the University budget.

The F&A costs recovered on grants allow the institution to build, maintain and operate research facilities (as opposed to teaching facilities). It is the obligation of all researchers who use institutional facilities to bring in grant funding along with the attendant F&A costs. The F&A dollars received are not extra dollars, but are part of the budget and are fully used to make the system work. Without them, research laboratories and facilities cannot be built and maintained.

UAB’s F&A cost reimbursement is driven by its Colleges and Universities Rate Agreement (Rate Agreement) negotiated with and mutually executed with its cognizant audit agency, the Department of Health and Human Services (DHHS).

The link to UAB’s Indirect Cost (IDC) Reimbursement Policy (December 21, 1999) is provided for your convenience and among other important information it states the following:

  1. All externally funded projects conducted by UAB shall seek reimbursement of indirect costs at the federally approved rates.
  2. When the sponsor is a legally constituted federal, state, or local government entity or not-for-profit entity such as a foundation or health agency and has a published and uniformly applied policy regarding the payment of indirect costs, UAB will abide by that sponsor's policy. Written evidence of such an agency's indirect cost payment policy must accompany any proposal bearing less than the rates referred to in item 1.

Note: the requirement is a published and uniformly applied policy.

UAB’s Rate Agreement is applicable to and covers all sponsored research, other sponsored activities and sponsored instruction per the federal guidelines and UAB policy.

UAB has three policy exceptions to its Colleges and Universities Rate Agreement:

These three exceptions are:

  1. effective by execution and implementation of the Vice President for Research and Economic Development,
  2. only applicable relative to the appropriate study type, and
  3. only when all criteria of the applicable guidelines are met.

Guidance is provided below to assist you in determining if an exception applies. These exceptions are (1) effective by execution and implementation of the Vice President for Research and Economic Development, (2) only applicable relative to the appropriate study type, and (3) only applicable when all criteria are met.

Beginning with question #1, take each question in turn until you reach an answer.

  1. Does the Federal government or non-profit sponsor have a published* and uniformly applied indirect rate less than our federally negotiated rate? (For example, based on the NIH 10/12 Grants Policy Statement indirect costs will not be reimbursed on Construction and Modernization Grants.)
    1. Yes: UAB will accept the entity's rate; however, written evidence of such an entity's applicable rate must accompany the proposal. The rate, if funds are allowed for F&A costs, will be calculated on Modified Total Direct Cost (MTDC) unless the sponsor/program specifies Total Direct Cost (TDC) or other Direct Cost (Other) exclusions.
    2. No: Proceed to #2.
  2. Will the project involve federal funds?
    1. Yes: Apply the federally negotiated rate calculated on MTDC unless the sponsor/program specifies TDC or other Direct Cost exclusions.
    2. No: Proceed to #3.
  3. Is the sponsor a foundation or health agency that does not have a published or uniformly applied policy regarding payment of indirect costs?
    1. Yes: Apply the federally negotiated rate calculated on MTDC unless the originating sponsor/program specifies a different rate or calculation.
    2. No: Proceed to #4.
  4. Is the project an industry sponsored clinical trial performed on either an idnustry- or investigator-developed protocol that consists of 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?
    1. Yes: Do the activities include retrospective chart reviews, analysis of existing medical data and records, laboratory research, or animal studies, or does the agreement require financial audit?
      1. Yes: Apply the federally negotiated rate calcualted on MTDC.
      2. No: Apply 30% F&A rate calcualted on TDC regardless of where the study is conducted.
    2. No: Proceed to #5.
  5. Is this a Community Service Project?
    1. Yes: Apply 0% F&A rate.
    2. No: Proceed to #6.
  6. Is this an industry sponsored training award to provide assistance with costs of educational materials, travel, or conference costs for which the sponsor has a published* and uniformly applied indirect rate less than our federally negotiated rate?
    1. Yes: UAB will accept the entity's rate; however, written evidence of such an entity's applicable rate must accompany the proposal. The rate, if funds for F&A costs are allowed, will be calculated on TDC unless the sponsor/program specifies TDC or other Direct Cost exclusions.
    2. No: Proceed to #7.
  7. Is this an industry sponsored training award to provide assistance with costs of educational materials, travel, or conference costs for which the sponsor DOES NOT have a published* and uniformly applied indirect rate?
    1. Yes: Apply 8% F&A calculated on TDC regardless of where the work is performed.
    2. No: Proceed to #8.
  8. Is this a Continuing Professional Education Activity (meeting the criteria below)?
    • The department is direct charged for the use of conference/training facilities, irrespective of activity location.
    • The contract requires limited financial accountability.
    • Sponsor will not direct or place conditions on the program or its content.
    • The CPE course is accredited.
    • Sponsor agrees not to use UAB’s name without consent.
    • The appropriate Dean indicates acceptance of the modified IDC rate by signing the Extramural Checklist. No per signatures will be accepted.
    1. Yes: Apply 10% F&A calculated on TDC regardless of where the work is performed.
    2. No: Proceed to #9.
  9. Is this an industry sponsor that does not wish to pay F&A costs at the negotiated rate and is not eligible for one of the exceptions described above?
    1. Yes: Provide a budget to the sponsor in which the F&A costs are combined and the F&A component is not presented separately, i.e. a total price budget. The award amount is fixed-price and may represent a fixed price for the total project or, for clinical trials, a fixed price per patient enrolled. Reflect the breakdown of direct and indirect costs using the appropriate rate from UAB's Rate Agreement in the UAB internal budget. This internal budget is not shared with the sponsor.
    2. No: Proceed to #10.
  10. See F&A Offsets for other options.

* Published as used here means a website or publicly distributed written announcement. In rare occasions a letter will be accepted, for example in the case of a small foundation that does not have a well-established grant administration program.

Full Recovery Rates

The following are accepted as full recovery of facility and administrative costs for the applicable kinds of grants or contracts.

Recovery Rate Applicability Reference
47.0%*
27.5%

26.0%

45.0%
26.0%
36.0%
26.0%
On-Campus Organized Research
Off-Campus Organized Research (Adjacent: locations within 45 mile commuting distance of the University)
Off-Campus Organized Research (Remote: locations outside above commuting distance)
On-Campus Instruction
Off-Campus Instruction
On-Campus Other Sponsored Activity
Off-Campus Other Sponsored Activity
UAB Colleges and Universities Rate Agreement
*Note: Rate Agreement for dates of scheduled rate changes as well as Modified Total Direct Cost (MTDC) exclusions, definitions of Off-Campus, Adjacent, Remote, and other pertinent information.
30.0% Clinical Trials - must meet the criteria specified in the guidlines. Clinical Trials F&A Rate
10.0% Continuing Professional Education and Industry Sponsored Training Awards Submitted to the Office of Sponsored Programs (OSP) – must meet the criteria specified in the guidelines CPE Agreements Reviewed by OSP Industry Sponsored Training Awards Submitted to OSP (top of page)
Entity/Agency's Published and Uniformly Applied Rate When the sponsor is a legally constituted federal, state, or local government entity or not-for-profit entity such as a foundation or health agency and has a published and uniformly applied policy regarding the payment of indirect costs, UAB will abide by that sponsor's policy. Written evidence of such an agency's indirect cost payment policy must accompany any proposal submitted to OSP bearing less than the full recovery rate in accordance with UAB Policy. UAB Indirect Reimbursement Policy
Note if the sponsor’s rate is not published and uniformly applied UAB expects to recover the full F&A per its Policy. See F&A Rate Offset for exceptional circumstances.
0.0% Non sponsor funded research or activity or internally sponsored grants i.e. General Endowment Fund (GEF). Non Sponsor Funded Research Projects


For-profit entities are not eligible for an alteration of the payment of indirect costs. Therefore, the expectation is that UAB will fully recover all F&A on any project funded by such an external agency.

Under those exceptional circumstances in which a sponsor is not eligible for an alteration of the payment of indirect costs or does not have a published and uniformly applied policy a Principal Investigator has two options for recovering F&A costs.

    Note: The award amount is fixed-price and may represent a fixed price for the total project or, for clinical trials, a fixed price per patient enrolled. The UAB internal budget reflects the breakdown of the direct and indirect costs using the appropriate rate from the UAB’s Rate Agreement. This internal budget is not shared with the sponsor.
  1. Request a total award amount inclusive of direct and F&A from the sponsor. The award amount represents the total price, wherein the total price is inclusive of direct and F&A. The PI should provide the sponsor with a total budget that includes the direct and F&A costs without reference to F&A (fixed amount, percentage or other).
  2. Request an offset of F&A by his/her Dean and Chair. The approval process for an F&A offset request is as follows;
    • The PI must provide a letter detailing and justifying the request. The letter should include the F&A rate per the Rate Agreement as well as the F&A rate to be provided by the sponsor and
      the dollar amount associated with each rate.
    • F&A Offset Approval Template (Form)
    • As indicated by their respective signatures on the letter, the letter must be reviewed and approved by the PI’s Chair and Dean. Final approval lies with the Vice President for Research and Economic Development.
    • The signed letter must accompany the submission
      to the Office of Sponsored Programs (OSP).

At the end of the fiscal year an adjustment will be made to the school’s F&A distribution based on offsets granted during the previous fiscal year.

Note: All sponsored projects, other sponsored activities and sponsored instruction projects are subject to federal and other audit. Account setup, billing and other post-award financial activities are managed by UAB’s Grants and Contracts Accounting (GCA) department.

Additional F&A Resources