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Facilities and Administrative Rates


Facilities and Administrative Costs (F&A) or indirect costs are charged to all sponsored programs (grants and contracts) under the requirements of the U.S. Office of Management and Budget Uniform Guidance 2 CFR 200 and consistent with the University’s federally-negotiated F&A Cost Rate with the Department of Health and Human Services, the University’s cognizant agency.

Recovered F&A costs reimburse the University for actual costs associated with performing research that are not specifically allocable to any single sponsored project. Such costs include utilities, buildings and facilities costs, information technology infrastructure, department and central administrative costs associated with managing externally funded projects and libraries.

Sponsors have an expectation that F&A costs applied to sponsored programs will not normally exceed the federally-negotiated rate, and that the rates applied to a federally-sponsored program represents the best value for the federal government.

So how does F&A work again? 

An accurate and quick explanation from our colleagues at NCURA entitled, “The Chicken Sandwich and F&A: How to Explain F&A to Faculty.”

Current F&A Rate

Effective July 1, 2012, the University implemented a new rate agreement. F&A Costs will be budgeted and expended using a rate of 40% of Total Direct Costs (TDC), excluding capital expenditures and subaward amounts in excess of $25,000.

The University’s negotiated F&A cost base INCLUDES the following budget categories:
  • Salaries and wages, including fringe benefits
  • Services
  • Materials and supplies
  • Travel
  • Rental costs of off-site facilities
  • Scholarships and fellowships
  • Tuition remission
  • Subawards, service agreements and consulting agreements up to $25,000 each
The University’s negotiated F&A cost base EXCLUDES the following budget categories:
  • Capital expenditures, including equipment having a unit cost of $5,000 or greater
  • The portion of any single subaward which exceeds $25,000

View the University’s F&A Cost Rate Agreement.

Description of F&A Costs for Proposals in Preparation

To accurately describe the F&A base used in all proposals in preparation, investigators are encouraged to utilize the following description:

“Facilities and Administrative (F&A or indirect) costs are calculated in accordance with Georgia Southern University’s federally-negotiated F&A rate agreement (Department of Health and Human Services, effective 7/1/2012), which is currently 40% of total direct costs excluding only capital expenditures and the amount of subawards in excess of $25,000. Georgia Southern University’s threshold for capital expenditures and capital equipment is $5,000.”

Application of F&A Costs

Federal Agencies

The University will seek full recovery of F&A costs regardless of the sponsor (federal, state and non profit). All project budgets should include F&A costs as determined by the University’s federally negotiated rate.

Under Uniform Guidance (2 CFR 200), there is a general rule that federal awarding agencies and pass-through entities should not compel cost sharing, including the reduction of indirect costs, on recipients or sub-recipients. 

When submitting an application for federal assistance, there is an expectation that it will be submitted with the appropriate rate from the university federally-negotiated rate agreement and that the federal agency will honor this rate. Specifically, 2 CFR 200.414 (c) states:

“The negotiated rates must be accepted by all Federal awarding agencies. A Federal awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section.”

Direct recipients or sub-recipients of federal funding “must not be encouraged or coerced in any way by the Federal awarding agency or pass through entity” to “waive indirect costs or charge less than the full indirect cost rate,” according to the Chief Financial Officers Council’s  Frequently Asked Questions (July 2017).

Prior to proposal submission, particularly when the prime source of funds is a federal grant-making agency, it is prudent to confirm whether a -policy has been authorized through a Federal statute, regulation, or through a Federal awarding agency authorized deviation.

F&A Rate Agreements and Pass-Through Entities 

A pass-through entity, a non-Federal entity that provides a sub-award to a sub-recipient to carry out part of federal project, is not authorized to make unilateral restrictions of indirect cost recovery. 2 CFR 200.331 states:

“All pass-through entities must: (a) Ensure that every sub-award is clearly identified to the sub-recipient as a sub-award and includes the following information at the time of the sub-award and if any of these data elements change, include the changes in subsequent sub-award modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and sub-award. Required information includes: […] (4) An approved federally recognized indirect cost rate negotiated between the sub-recipient and the Federal Government.”

If a “sub-recipient already has a negotiated F&A rate with the Federal government, the negotiated rate must be used” in a sub-award, according to the Chief Financial Officers Council’s  Frequently Asked Questions (July 2017).  Additionally, per the FAQ:

“If a non-Federal entity receiving a direct Federal award or a sub-recipient voluntarily chooses to waive indirect costs or charge less than the full indirect cost rate, Federal awarding agencies and pass-through entities can allow this. The decision must be made solely by the non-Federal entity or sub-recipient that is eligible for IDC reimbursement, and must not be encouraged or coerced in any way by the Federal awarding agency or pass-through entity.”

Use of On- and Off-campus Rates

The use of the on- or off-campus F&A rate is determined as follows:

  • If 51% or more of proposed salaries for University personnel represents compensation for on-campus effort, the on-campus rate of 40% will apply.
  • If the project will be performed in facilities not owned by the University, OR if rent is directly allocated to the project, AND if 51% or more of proposed salaries for University personnel represents compensation for off-campus effort, the off-campus rate of 15% will apply.
  • The inclusion of a subcontract or consulting agreement in a budget has no bearing on the applicable rate. The applicable on- or off-campus rate is related solely to the compensation to be paid to University employees.

Variations and Exemptions

Despite the acceptance of a federally-negotiated F&A rate between the University and its cognizant agency, the F&A rate applied to a sponsored program may deviate based upon the sponsor’s written policies or the institution’s acceptance of an alternate rate as mandated by a sponsor. For example, some federal sponsors may place a cap on the rate that may be charged to all of its awards or certain types of awards.

Only the Vice Provost for Research and/or the Provost possess the authority to approve an indirect cost exception authorizing less-than-full indirect cost recovery for a proposal or an award. Principal Investigators are not delegated this authority. They are not authorized to negotiate with or to accept reduced indirect cost rates from any sponsor.

The University attempts to obtain full recovery of F&A costs on all sponsored programs, except where specific written policies of the sponsor preclude doing so. When a sponsor’s formal written and documented policy stipulates a lower F&A rate, the University will abide by the restriction. However, requests for reduction or waiver of the federal F&A rate or a non-federal sponsor’s stated rate must be approved by the Provost.  Please contact your Grant Coordinator for further information.

Last updated: 9/2/2020