Rutgers University Facilities and Administrative Costs (Indirect Costs) on Sponsored Projects

It is Rutgers University policy that all sponsored research be charged for the full cost of an externally-funded project including all grants, contracts, or other types of agreements. This includes both the direct costs (allowable costs such as salaries, supplies etc. that are used to perform the project) and indirect costs, officially termed Facilities and Administrative (F&A) costs. This document clarifies these costs and processes related to any changes in the F&A costs on sponsored program proposals.

What is an F&A Costs? Per OMB CIRCULAR A-21, F&A costs are broad categories of costs. Circulars are all being consolidated under the omni-circular: OMB Uniform Guidance:  Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Guidance).  The Guidance supersedes and streamlines requirements from OMB Circulars A-21, A-87, A-110, A-122, A-89, A-102 and A-133 and the guidance in Circular A-50 on Single Audit Act follow-up. "Facilities" is defined as depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses, and library expenses. "Administration" is defined as general administration and general expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of Facilities (including cross allocations from other pools). The federal F&A cost rate is negotiated periodically with the Department of Health and Human Services.

What is the Rutgers University F&A Cost Policy?  All proposals for grants, contracts and other sponsored agreements submitted by Rutgers University must include the allowable federally negotiated F&A cost rates, which are listed at http://orsp.rutgers.edu/institutional-information on the Office of Research and Sponsored Programs website.

Are there exceptions to the F&A Policy when a lower rate is published by a sponsor?  An exception from the policy of charging full F&A costs will be permitted for those non-profit sponsors and governmental agencies that have a published policy for all applicant organizations limiting their F&A cost rate.  The Principal Investigators will automatically be granted this reduction provided proof of the published rate is available on line or in the written guidelines for the agency.

What is the rate for clinical trials? In cases where a medical or pharmaceutical company funds a clinical trial, the indirect cost rate used is the published rate at http://orsp.rutgers.edu/institutional-information and is applied to Total Direct Costs (TDC). This rate is not based on the type of sponsor but the fundamental nature of the work, for example in testing the efficacy of a drug or a device or a clinical trial.

How can I find out if I can get an F&A cost waiver or reduction?  In cases where there is not a published example of rates lower than the negotiated Rutgers University F&A rate, an F&A cost waiver can be requested only under exceptional circumstances.  This can allow F&A costs to be charged at a rate lower than the Rutgers’ published rate or that F&A costs will not be charged to a particular sponsored agreement. This waiver requires the approval of the department chair and Dean or Director prior to submission for consideration to the Senior Associate Vice President for Research and Economic Development by his designee the Vice President for Research.  In all cases the approval will be granted only when the applicant demonstrates the benefit to the university for the reduced rate outweighs the benefits of recovery of full F&A and has a significant programmatic benefit to the University.  These cases can involve compassionate use or major public health benefits or extraordinary or unique contributions to the missions of the University.  Please note the small size of the grant or increased competitiveness are not acceptable justifications.  NO agreement for reduced F&A costs can be made with any sponsor prior to University approval.

How do I request a waiver/reduction of F&A Costs when absolutely necessary?  Any request for reduced F&A cost recovery must be approved in writing by the department chair and Dean/Director using the required form available from the Office of Research and Sponsored Programs (non-profit sponsors) or the Office of Corporate Contracts (for-profit sponsors) prior to submission. Email the fully executed form to proposal_exception@rutgers.edu, the Rutgers budget template and cc your grant specialist or contract negotiator. These offices will work with the Vice President for Research to review and obtain the approval in advance of submission of the application or contract.  All requests with the Chair and Dean/Director approval must be submitted 10 working days in advance of a deadline.  Failure to submit the request in sufficient time for review and approval will result in submission at the full F&A rate.  All information requested on the form must be included at the time of submission for final approval.

Posted June 23, 2014