What F&A Rate Do I Use?

It is important to select the correct Facilities and Administration Cost rate for a project as the proposal budget is being prepared. VCU has three categories of negotiated F&A rates, and in each category there are ON- and OFF-Campus rates. The appropriate rate to use depends on the nature of the project. It is important to note that some programs may have statutory or regulatory limits on F&A recovery, but that does not change the nature of the project.

Organized Research Rate

Sponsored research means 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. [Source: A-21 B.1.(b)(1)]

Includes all research and development activities that are separately budgeted and accounted for and that are sponsored by federal and non-federal agencies and organizations. [Source: Guidelines for Assigning Indirect Cost Pool Codes]

Research Training Rate

“Training rate” is a misnomer. There is NOT a negotiated “training” rate. However, US DHHS and US Department of Education have a regulatory limitation on F&A for programs that THEY identify as “training” (as specified in the program announcement). This limit is currently (2001) 8% of “Total Allowable Direct Costs”, a different base than MTDC. Total Allowable Direct Cost is Total Direct less Tuition and Fees and Capital Equipment. (Currently there is a proposal that NIH may increase that regulatory limit for many research training activities.)

Includes research training activities established by grant, contract, or cooperative agreement from outside organizations. (These activities may include fellowships and stipends that require statements of appointment.) [Source: Guidelines for Assigning Indirect Cost Pool Codes]

Clinical Trials Funded by Federal Agencies

Clinical Trials funded by federal agencies use the Organized Research Rate. A clinical trial is a controlled, clinical testing of investigational new drugs, devices, treatments, or diagnostics, or comparisons of approved drugs, devices, treatments, or diagnostics, to assess their safety, efficacy, benefits, costs, adverse reactions, and/or other outcomes, if any, in human subjects. Preclinical laboratory studies or studies in animals are not included under the term clinical trial. If the drug study is the development of a drug, rather than the testing of a drug on patients, it should be classified as organized research. Clinical Trials supported by federal funds receive the Organized Research Rate. [Source: Guidelines for Assigning Indirect Cost Pool Codes]

Note that VCU provides a special rate using the Total Direct Cost base for clinical trials with industrial/commercial sponsors because this base is used by almost all universities and is well understood by industrial/commercial sponsors. Contact the Office of Industry Partnerships for further information.

Instruction Rate

Sponsored instruction and training means specific instructional or training activity established by grant, contract, or cooperative agreement. Except for research training [see above], this term 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. For purposes of the cost principles, this activity may be considered a major function even though an institution's accounting treatment may include it in the instruction function. [Source: A-21 B.1.]

Except for sponsored training, which is defined below, includes all teaching and training activities, whether they are credit or noncredit courses, for academic, vocational and technical instruction, for remedial and tutorial instruction, and for regular, special, and extension sessions. [Source: Guidelines for Assigning Indirect Cost Pool Codes]

Education Services Rate

There is NOT a negotiated “educational service” rate. However, US DHHS and US Department of Education have a regulatory limitation on F&A for programs that THEY identify as “training” (as specified in the program announcement). This limit is currently 8% of “Total Allowable Direct Costs”, a different base than MTDC. Total Allowable Direct Cost is Total Direct less Tuition and Fees and Capital Equipment. Note that “research training” is discussed above.

Other Sponsored Activities Rate

Includes programs and projects financed by federal and non-federal agencies and organizations that involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects, community service programs and studies, technical assistance and service programs, extension services, and agricultural experiment stations. [Source: Guidelines for Assigning Indirect Cost Pool Codes]

Other sponsored activities means programs and projects financed by Federal and non-Federal agencies and organizations that 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. [Source: A-21 B.1.(c)]

NOTE: Some federal agencies, notably HRSA, are specifying in their program notices that some activities should be at the Other Sponsored Activities rate rather than the Research rate. The activities under these programs are clearly neither research, nor instruction.

On- vs. Off-Campus

OFF-CAMPUS DEFINITION: (for facilities and administrative costs purposes):
For all activities performed in facilities not owned by the institution and to which rent is directly allocated to the projects the off-campus rate will apply. Grants or contracts will not be subject to more than one facilities and administrative costs rate. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. [Source: VCU’s rate agreement] “Rent directly allocated to the project” may involve rent as a direct cost to the sponsor budget, or may involve third party cost sharing. “Off-campus” DOES NOT refer to field work.

Once the project type and location are determined, the proper federally negotiated rate should be applied. Current rates can be found here.

Federal rates should be used with state and private sponsors, and must be used if VCU will be a subcontractor or subawardee on a federal prime award. Questions can be directed to your OSP team leader.