Office of Research, UC Riverside
Sponsored Programs Administration

Facilities and Administrative Costs

Background

As a publicly supported institution, the University is obligated to The Regents and the State to recover the full costs of sponsored research activities. Facilities & Administrative (F&A) costs are reimbursement for costs incurred and paid primarily with public funds from the State of California to cover actual operating costs incurred by the University for facilities and administrative personnel necessary to support extramurally funded research. All organizations require an infrastructure of buildings, equipment, management, administrative and fiscal systems, and staff to carry out the activities of the organization.

The federal Office of Management and Budget (OMB) Circular A-21, Cost Principles for Education Institutions, 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."

As a recipient of Federal funds, UCR is required to negotiate a F&A cost rate agreement with the Department of Health and Human Services (UCR's cognizant federal audit agency) to establish F&A cost rates for use with UCR's extramural awards. The University negotiates "predetermined" F & A cost rates. These rates are final and not subject to upward or downward adjustment based upon actual costing experience. Typically, predetermined rates are significantly lower than those supported by the calculations used by the University to determine its actual F & A cost rate. However, by negotiating a stable F &A cost rate in a multi-year agreement the University avoids annual audits of actual cost data and annual rate adjustments, and also avoids significant rate fluctuations that may result from fluctuating cost pools.

Applying F&A Cost Rates in Proposal Budgets

The rates listed on the F&A page in the Quick Reference section of this website must be used when estimating F&A costs in proposals to extramural sponsors. Use of a rate other than those identified in our F&A rate agreement or approved by the UC Office of the President, requires approval of a waiver request. Contact the Contract and Grant Officer assigned to your unit for questions regarding the appropriate rate to use in your proposal budget.

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Calculating F & A Costs

Calculate the Modified Total Direct Cost (MTDC) base by subtracting the costs listed below from the budgeted Total Direct Costs:

  • equipment and capital expenditures;
  • charges for patient care;
  • 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;
  • participant support costs;
  • subawards issued to other UC campuses; and
  • the portion of each non-UC subaward that is in excess of $25,000. Simply stated, UCR 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.

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F & A Cost Waivers

Facilities and administrative costs are a normal and necessary part of funding research at the University of California, Riverside. These costs are real expenses that are incurred by the campus and that must be met, either by the sponsor that provides support for the research or by other funds.

In order for UCR to waive or reduce F & A costs on a given project, a compelling reason showing that a higher University purpose will be served is necessary. It is for this reason that UC campuses cannot make independent decisions on these matters; requests for waivers which are received by the Vice Chancellor for Research are forwarded to the Office of the President for review and approval.

It is increasingly the case that requests for such waivers are presented to the Office of Research very close to the time at which the proposal must be approved and submitted to comply with a rigid deadline. Such timing does not allow for proper and fair evaluation of such requests. Therefore, requests for waivers or partial waivers of F & A costs, including a full explanation of the reasons for the request, must be forwarded to Sponsored Programs Administration at least 5 working days before the deadline for submitting a proposal. Each request will be considered independently on its own merits. Approvals are the exception rather than the rule. In particular, requests will not be approved simply because a PI feels more funds are needed for direct costs than would otherwise be available.

The above does not apply for proposal submissions to sponsors for which the University of California has agreed to a reduction or waiver of F & A costs on a class basis.

Address any questions concerning whether a specific sponsor falls under this exemption with the Contract and Grant Officer assigned to your unit.

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.

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, participant support costs, 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.