Facilities and Administrative (F&A) rate policy applicable to sponsored programs. Show
The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Chapter I, Chapter II, Part 200, also known as the “Uniform Guidance”) includes principles for determining costs applicable to grants, contracts, and other agreements between the Federal Government and non-federal entities, including institutes of higher education (IHE’s). The Uniform Guidance defines criteria for determining both direct and F&A costs. In addition, the Uniform Guidance establishes a mechanism for higher education institutions to calculate, negotiate, and recover F&A costs from Federal and other sponsors. Direct costs are those identified specifically with a particular sponsored project with a relatively high degree of accuracy. F&A costs are those costs incurred for a common or joint purpose benefiting more than one cost objective that cannot be readily assigned to a particular sponsored project. F&A costs are also referred to as indirect costs or IDCs. Management Accounting and Analysis (MAA) develops and negotiates the University of Washington’s (UW) F&A Rate with the Federal Government’s Department of Health and Human Services, Cost Allocation Services (HHS-CAS). F&A Rates are based on the UW’s actual operating costs. In accordance with the Uniform Guidance, the UW assesses its F&A Costs on a regular basis and allocates these costs to different activities, such as research or teaching, proportionate to the benefit provided. Once all F&A Costs are determined, the UW then determines the portion of those F&A Costs that are attributable to research. This information is then reviewed by HHS-CAS and F&A Rates are negotiated for the next four to five years. HHS-CAS then issues a document, the F&A Rate Agreement, with the final rates. Principal Investigators (PI), Research Personnel, Research Administration Personnel, Academic Unit Chair, Dean’s Office, eGC1 Reviewers, Office of Sponsored Programs (OSP), Grant and Contract Accounting (GCA), Management Accounting and Analysis (MAA), Office of Planning and Budgeting (OPB). Per Executive Order 34, it is UW policy to seek full reimbursement of F&A Costs in connection with sponsored programs unless precluded by sponsor policy or exceptional circumstances. Accordingly, the UW applies F&A Rates to sponsored program budgets consistent with the F&A Rate Agreement unless a circumstance below applies. Deviations from this policy require approval via an F&A Waiver. Follow procedures and guidance outlined in this section. F&A RatesThe F&A Rate Table provides a summary of approved rates from the F&A Rate Agreement, to be used for proposal preparation. Applying F&A Rates and Rate ChangesThe effective period for each F&A Rate is in the F&A Rate Agreement. Time of ProposalIn proposals, the F&A Rate in effect at the start of a budget period should be used for that entire budget period. Use the provisional rate when the period of performance in the proposal budget extends beyond the expiration date of the last predetermined rate in the F&A Rate Agreement. EXAMPLE: Multi-year award with budget period different than UW
fiscal year. July 2013 – June 2014: 55%
Time of AwardThe awarded F&A Rate is the F&A Rate that applies. Note: There are cases when a Federal sponsor issues an award with two F&A Rates in a single budget period when the budget period crosses a UW fiscal year. EXAMPLE: The F&A Rate Agreement listed the following F&A Rates by UW fiscal year
A two-year award has budget years of April to March. The sponsor issues the award based on the fiscal year rates as follows: EXAMPLE: Sponsor Issues Award with Two Rates in Single Budget Period
Post Award Rate ChangesF&A Rates on an award only change when the:
Provisional RatesA Provisional Rate is a temporary rate, stated in the F&A Rate Agreement, used when the award period of performance extends beyond the expiration date of the last predetermined rate in the F&A Rate Agreement. If the new Final F&A Rate is less than the Provisional Rate used in a proposal, the new Final F&A Rate will be applied to the award and, if necessary, retroactive to its effective date. In all other cases, awards already established in the UW Financial system will not be adjusted and the F&A Rate in the award is the applicable rate. EXAMPLE: Provisional Rates and Post Award F&A Rate Changes
Activity TypesThe major functions of an institution, as defined in Federal Uniform Guidance, include Organized Research, Instruction, Other Sponsored Activities and Other Institutional Activities. Sponsored Program Activity Type is a factor in determining applicable F&A rate(s). Organized Research:All research & development activities sponsored by federal or non-federal agencies & organizations. Organized Research
Instruction:Specific instructional or training activity established by an award. Instruction
Other Sponsored Activities (OSA):Sponsored awards (federal and non-federal) for activities other than instruction and organized research. Other Sponsored Activities (OSA)
Activity LocationsIn addition to the Sponsored Program Activity Type, there are different F&A Rates based on location as defined in the F&A Rate Agreement. On Campus:Sponsored projects carried out at Seattle, Bothell, and Tacoma campuses, Harborview Medical Center, and Friday Harbor Labs. South Lake Union:Examples: Rosen, Brotman, SLU II A, B, and C buildings, 750 Republican and 1616 Eastlake. Applied Physics Lab (APL), Research Vessel and Primate Center:If the administrative unit responsible for a project is the Applied Physics Lab, Regional Primate Center, or Research Vessels, those respective rates should be used, irrespective of the actual location of the research. Applied Physics Lab (APL)If any award activities involve APL locations or personnel, those costs must use the APL F&A rate, regardless of the total direct cost per year. Consult with APL before calculating APL components of the proposal budget to accurately incorporate their costs. EXAMPLE: Portion of Project Occurs at APL
Primate CenterP51 Washington National Primate Center Core Grant “A” RateCore grant funding is for the Washington National Primate Center (WaNPRC). The Core Rate (“A” rate) is used for all Core grant activity, no matter where located. Non-Core Federal “B” RateThe WaNPRC “B” rate is used for non-Core Federal sponsored programs at WaNPRC. The Non-Core Federal “B” rate is used for these Federally funded sponsored programs, even if personnel working at WaNPRC on the sponsored program award activity have other non-WaNPRC lab space or office space. Non-Core non-Federal “C” RateThe WaNPRC “C” Rate is used for non-Core non-Federal sponsored programs at WaNPRC. The Non-Core “C” rate is used for these non-federally funded sponsored programs, even if personnel working at WaNPRC on the sponsored program award activity have other non-WaNPRC lab space or office space. Split Rate Methodology: When Non-Core Primate Center location is one of two or more locations of the sponsored program award activityWhen the Primate Center is one of two or more locations of the sponsored program award activity, and the total direct cost in a budget year is less than $250,000, a single F&A rate will apply. Use one of the following two methodologies to decide on the single rate to use when the Primate Center is one of the locations:
If the total direct costs in a budget year are $250,000 or more, split rates using standard split rate methodology, which is identifying direct costs by the location where incurred, and applying the appropriate F&A rate. Note that Primate Center non-salary costs are always identified with the Primate Center location. WaNPRC FAQS
Research VesselReview rate information from the F&A Rate Table. Off-Campus:These locations are considered off-campus:
Leased SpacesIf you are unsure whether a specific location is leased or owned, check with your department administrator, school/college or review GeoSIMS. As stated in off-campus locations, use the off-campus rate for award activity conducted in leased facilities where space related-costs (e.g. rent, utilities, maintenance) are charged to the award. For leased space locations where space-related costs are not charged to the award, use the F&A Rate that corresponds to the Sponsored Program Activity Type conducted at the Location. Examples: If rent is not charged to the award on a leased space because the UW is covering the costs centrally, and the Activity Type is Organized Research, use the On-Campus Organized Research rate. If rent is covered by an external entity and neither the sponsor nor the UW is paying rent, charge the Off-Campus rate. Activity at Two or More LocationsIf the award activity will be conducted at two or more locations, more than one F&A Rate might apply in certain circumstances. Review guidance for how budgets are established with more than one F&A Rate. To determine if more than one F&A Rate applies, follow these principles: Annual Budget Direct Costs are Less Than $250,000When the direct costs in a budget year are less than $250,000, a single F&A Rate must be applied for that year. Use the F&A Rate that applies to the location where the preponderance (more than 50%) of UW salaries will perform the work for that budget year. EXAMPLE: Budget year where total Direct Costs are $225,000 (less than $250,000)
*The applicable F&A Rate is 55% because the preponderance of UW salaries is at Location 1 (75% of the total UW salaries). Annual Budget Direct Costs are $250,000 or MoreWhen the direct costs per budget year are $250,000 or more, the applicable rate should be used for each location. Use one of the following methods that apply to your situation. When direct costs can specifically identified by location, apply the appropriate F&A Rate to each location’s direct costs.
Costs incurred must be allocated by the location where they were incurred. If the actual cost allocation differs significantly from the budget, rebudgeting may be required. When direct costs cannot be identified by location:
Costs incurred must be allocated by the same ratio as budgeted. If the actual cost allocation differs significantly from the budget, rebudgeting may be required. F&A BaseThe F&A Base is the Direct Costs to which the F&A Rate is applied. For Federal Awards, the F&A Rate Agreement provides information on the appropriate F&A Base. The most common F&A base used is modified total direct costs (MTDC). However, individual federal agency regulations, or terms and conditions may supercede the F&A Rate Agreement. For non-federal awards, the sponsor requirements should be followed. In the absence of any requirements, the Total Direct Cost (TDC) base will be used. F&A Base Type ExamplesMTDC Budget with an F&A Rate of 55%
*First $25,000 of each subaward is included in the base calculations per subaward. Total Direct Cost (TDC) Budget with an F&A Rate of 10% F&A
Subawards and F&A RatesOutgoing SubawardsOn all subawards (federal and non-federal), the UW must flow down sponsor requirements from the award into the subaward agreement, including those related to the F&A Rate. If the sponsor allows for use of a federally negotiated F&A Rate, then the subrecipient should use their federally negotiated F&A Rate. If the sponsor has an F&A Rate cap policy, the subrecipient must use the cap. If the subrecipient does not have a federally negotiated F&A Rate, and if the sponsor does not have a rate cap policy, the maximum F&A Rate the subrecipient can use is 10% Modified Total Direct Costs (MTDC) base. Examples:
Incoming SubawardsIf the UW receives a subaward, the pass-through entity flows down originating sponsor requirements from the award into the subaward agreement, including those related to the F&A Rate. The UW applies this GIM 13 policy, when receiving funding from a pass-through entity. This is the case even if a pass-through entity may have a lower F&A Rate than the UW. F&A Rate WaiverThe UW does not waive F&A costs unless the PI presents a justification as to why the UW should waive such costs which is accepted by the department, School and the Office of Sponsored Programs. Requests must be made using the F&A Waiver Request form to capture PI, department, and school approval. The proposal budget submitted to the Sponsor must use the rate approved in the F&A Rate waiver. ResponsibilitiesDirector, Office of Sponsored Programs
Dean, Director, Unit Head
Department Chair
Principal Investigators
Office of Sponsored Programs
Unit Administrator/Fiscal Lead
Grant and Contract Accounting
Management Accounting and Analysis
Vice Provost for Research
DefinitionsCapital Expenditures Direct Costs Equipment Facility & Administrative (F&A) Costs F&A Rate Agreement Fellowships Modified Total Direct Costs (MTDC) MTDC, as defined by Uniform Guidance, “excludes Equipment (including equipment fabrication), capital expenditures, charges for patient care, and tuition remission, rental costs, scholarships fellowships, participant support costs, as well as the portion of each subaward in excess of $25,000.” Award budgets with Participant Support costs includes a sub-budget with an F&A Rate of 0%. This way UW does not charge F&A on Participant Support. Negotiated F&A Rate Rate established by the federal government for a specified period of time. Negotiated rates can be: Effective: The rate in “effect” for a specified period of time. Final: Negotiated rate for the first year of the F&A rate agreement. During that year it is the “effective” rate. Predetermined: negotiated rates for each fiscal year included in the effective period of the F&A rate agreement. identified as “Predet.” on the rate agreement. During those fiscal years it is the “effective”rate. Provisional: A provisional rate is a temporary rate to be used in any period where a final or predetermined rate was not specified in the rate agreement. Non-Profit Patient Care Research Affiliate Programs (RAP) Rental Costs Salary & Wages Scholarships Subaward Total Direct Costs (TDC) Tuition Related Resources
Contacts
Review ScheduleThis policy is reviewed by the Office of Sponsored Programs at time of approval of new F&A rate agreement and as necessary to reflect changes in Federal regulation or University policies. Details on changes to this GIM are available from the Office of Sponsored Programs, What are the four purposes of cost allocation?A cost allocation is a good tool to use on an annual basis to track changes in costs. Allocating costs serves three main purposes. These are to: 1) make decisions, 2) reduce waste, and 3) determine pricing.
What is the point of allocating costs after allocation How is the resulting information used?What is the point of allocating costs? After allocation, how is the resulting information used? The primary purpose of cost allocation is to assign the indirect and some direct costs in a way that ensures that patients are only paying for only the costs of the services and products they received.
What is the meaning of absorption costing?Absorption costing, sometimes called “full costing,” is a managerial accounting method for capturing all costs associated with manufacturing a particular product. The direct and indirect costs, such as direct materials, direct labor, rent, and insurance, are accounted for by using this method.
What is variable costing for management analysis?What is Variable Costing? Variable costing is a concept used in managerial and cost accounting in which the fixed manufacturing overhead is excluded from the product-cost of production. The method contrasts with absorption costing, in which the fixed manufacturing overhead is allocated to products produced.
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