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How Facilities & Administrative (F&A/Indirect) Cost Rates are Determined

Federally Funded Research

Each fiscal year, the Foundation submits proposed Facilities & Administrative (F&A/indirect) cost rates to its cognizant agency, the U.S. Department of the Army, for approval. The Army often does not make final determination of our rates until several months into the fiscal year. When this is the case, we must adjust all federally funded projects retroactive to October 1.

HJF's federal indirect cost rates are calculated under guidelines established by the Office of Management and Budget (OMB). The Foundation is required to base its federal F&A cost rates on the Modified Total Direct Cost (MTDC), which is the direct cost of research less:

• Equipment costing more than $5,000 per item;
• The portion of each subcontract in excess of $25,000;
• Alterations and renovations;
• Rent (portion of each lease greater than $25,000); and
• Stipends.

The Foundation has two F&A cost rates for federally sponsored research programs. One is applied to research programs conducted at USU (on-site), and the other is applied to programs conducted elsewhere (off-site).

Off-Site Rate (Research Not Conducted at USU)

The off-site federal F&A rate reflects many of the Foundation's costs associated with project administration, regardless of location. It includes personnel, accounting, budgeting, finance, purchasing, contracting and research administration services.

On-Site Rate (Research Conducted at USU)

On-site projects are charged an additional F&A cost, which is reimbursed to USU to support the research infrastructure at the University. For example, HJF must reimburse USU for the use of lab space, its upkeep, telephone service and other utilities, computer center, library and logistics. Also included in the USU portion is the Sponsored Project Administrators (SPA) Program, which provides funds to USU departments for HJF research administration support.

Privately Sponsored Research

For privately sponsored research, HJF negotiates financial and legal aspects of the proposed agreements. F&A costs for these types of projects may be higher than federally sponsored projects to cover costs that are incurred, but not included in, the federal rate and staff time involved in preparing the research agreements. In general, F&A costs are added to the direct research costs and are paid by the sponsor.