Facilities and Administrative (F&A) Costs

What are F&A Costs for Sponsored Projects?

Space Science Clean Room

What are Facilities and Administrative Costs (F&A)?

Facilities and Administrative (F&A) costs, also known as indirect costs, are overhead costs that Rice University incurs in conducting or supporting sponsored projects. These costs cannot readily be identified as benefiting a particular research or project. F&A costs are defined by 2 CFR 200.1 as costs 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.  Like direct costs, F&A costs, are the real costs for performing research. F&A costs are broad categories of costs. “Facilities” is defined as depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses, and library expenses. “Administration” is defined as general administration and general expenses, departmental administration, sponsored projects administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of Facilities (including cross allocations from other pools).

What are Modified Total Direct Costs (MTDC)?  

Modified total direct costs (MTDC) apply to federally sponsored projects as negotiated in FY24 DHHS F&A Rate Agreement.  MTDC consists of 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, tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subaward in excess of $25,000 from the F&A calculation. 

When is the off-campus rate used? 

The off-campus rate of 26% applies only to federally sponsored projects, as negotiated and included in Rice’s FY24 DHHS F&A Rate Agreement. For most federally sponsored projects the “on-campus” negotiated F&A rate applies as the work occurs in on-campus locations include space in buildings owned by the University and, in many instances, space in buildings leased by some entity of the University or utilizing resources of the university. An “off‐campus” determination on a sponsored project implies that there are no facilities costs associated with the project, though it is permissible to direct charge rent expenses when necessary. Charging the off-campus rate results in a lower F&A reimbursement to the University. However, since virtually all projects utilize at least some on‐campus resources, an off‐campus determination has significant fiscal ramifications for the university. As defined in FY24 DHHS F&A Rate Agreement, off-campus is for all activities performed in facilities not owned by Rice and to which rent is directly charged to the project(s). The off-campus rate applies to federal projects in which more than 50% or more of budgeted University time and effort is performed off-campus, the off-campus rate will apply to the entire project.

What types of awards are eligible for Reduced F&A Rates or Full Waiver of F&A? 

As required by, 2 CFR Part 200, the federally negotiated rate is used for federally sponsored projects. F&A rates for non-federally sponsored projects is defined in F&A and Fringe Benefit Rates FY24.  If a sponsor indicates in their guidelines a different F&A rate from Rice’s approved rate, then the proposal must adhere to the proposal guidelines. If no guidelines are provided by the sponsor, then F & A Waiver Request Form must be completed and submitted for review.  

What is the process for requesting Reduced F&A or Full Waiver? 

It is required by OMB, 2 CFR 200 that charges to projects are allowable, reasonable, allocable, and consistently applied.  As such all projects incur F&A costs.  F&A rates are determined by the institution and must be consistently applied. Any exceptions to the rate must follow the university policy and is only authorized by university officials and not individual investigators. Principal investigators, or their designee, are not authorized to negotiate F&A, sign, or submit budget request for external funding that does not also include SPARC’s official approval.  

Rice University does not generally waive or reduce the F&A rate (indirect cost rate) applicable or as negotiated under our federal rate agreement, because F&A recovery helps to fund the costs that the University incurs to support research. Any request for waiver should document the unusual circumstances that result in F&A charges being an extraordinary hardship to the project. Such requests for waivers or reductions must be submitted to the Office of Research by using the F & A Waiver Request Form.  The F&A waiver request form must be approved by the appropriate chair(s), dean(s) prior to sending to the Vice Provost for Research. A copy of the approved waiver must be submitted to SPARC with the proposal in Cayuse. The University reserves the right to charge the school, department or PI for F&A that is waived or reduced below the rate ordinarily applicable.

Please contact osp@rice.edu with any questions.