Application of F&A Rates at Time of Award Setup

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Policy Number:
UW-4014
Responsible Office:
Research and Sponsored Programs

University Policy

Rationale/​Purpose:

The purpose of this policy is to clarify:

1) situations in which a project is proposed and/or awarded with one F&A rate and the University subsequently negotiates a new F&A rate agreement with the Federal government, and 2) how to address which F&A rate is applied when an award is transferred to UW-Madison from another institution. 

Definitions:
Facilities and administrative costs (F&A)
Those costs, often called indirect costs, incurred for a common or joint purpose benefitting more than one cost objective. They are costs that cannot be easily assigned to specific cost objectives without a disproportionate effort in relation to the results achieved. 
Modified Total Direct Costs (MTDC)
All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. 
Scope:

All faculty and staff who engage in or propose to engage in sponsored projects and all federal and non-federal sponsored projects.

Policy:

Periodically, the University negotiates a new F&A rate agreement with the Federal government.  While it is important to recover our F&A costs under the new rate agreement, the University does not want to apply the rates in a way that would reduce the amount of direct costs currently available to research projects. We understand that research was planned and developed with a specific budgeted amount necessary to accomplish the work. 

The University will apply new, Federally negotiated F&A rates according to long-standing principles and practices. Due to the number of active programs and pending applications that include previously negotiated F&A rates, a transition from the old to the new rates will be administered as follows:

  1. Rates currently in effect on all active awards will be continued for the balance of the competitively funded period. In addition, non-competing continuation applications under these awards may continue to use the rate in effect.
  2. Once a new F&A rate agreement is negotiated and announced, all applications should use the new F&A rates.
  3. For applications submitted prior to the release of a new F&A rate agreement that would result in awards made after the release of a new F&A rate agreement, the following rules apply:
    1. If the F&A rate in the application is lower than the new negotiated F&A rate, the University will accept the rate used in the application for the life of that competitive segment unless the Sponsor increases the F&A rate and provides the additional funding.  This approach is to ensure that the amount of direct costs available to the research project is preserved.
    2. If the F&A rate in the application is higher than the new negotiated F&A rate, the University will use the new, lower negotiated rate for the newly awarded agreement for the life of the competitive segment.  Thus, applications submitted at a higher rate but awarded after the release of a new, lower rate will use the lower rate for the duration of the competitive segment.   

Additionally, when an award is transferred from another institution to UW-Madison, if the F&A rate on the original (other institution’s) award is lower than the current UW-Madison F&A rate, the department and division may request an F&A waiver in order to use the original, lower rate.  F&A waiver requests are reviewed on a case-by-case basis by the Assoc. Vice Chancellor for Research Administration.  If the UW-Madison F&A rate is lower than the previous institution’s F&A rate, then the UW-Madison rate would be used.

Your consistent use of the appropriate F&A rate is appreciated. See the RSP web site at https://rsp.wisc.edu/rates/ for more information concerning F&A policy and rate information by sponsoring agency.

Questions concerning F&A rates on proposals and awards should be directed to your College/School Research Administrator or your Pre-Award Grant and Contract Specialist in Research and Sponsored Programs. Questions concerning active projects should be directed to your College/School Research Administrator or the appropriate Sponsored Projects Accountant in RSP.

Related UW-Madison Policies:

UW-4011 Collection of Indirect Costs

Related UW–Madison Documents, Web Pages, or Other Resources:
External References:

Policy Administration

Approval Authority:
Associate Vice Chancellor for Research Administration, Director Research and Sponsored Programs
Policy Manager:
Associate Director, Research Financial Services
Contact:
Policy & Planning Analyst -- Jennifer Rodis, rodis@rsp.wisc.edu, (608) 890-2538
Director, Grants and Contract Services -- Mark Sweet, masweet@rsp.wisc.edu, (608) 265-9252
Associate Director, Research Financial Services -- Angie Johnson, angie.johnson@rsp.wisc.edu, (608) 890-3147
Effective Date:
07-06-2022
Date Issued:
07-06-2022
Retrieved:
04-27-2024 08:14:38