Facilities & Adminitrative Costs
F&A, also known as 30% Institutional Overhead Rate, and formerly known as Indirect Costs, are applied to procedures, tests and work that require time and effort on the part of the research team. At NYU Medical Center the indirect cost rate, for industry sponsored or supported clinical trials, is 30%.
Examples of procedures that have F&A applied are: laboratory tests, radiology procedures, and coordinator time. F&A costs represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the organization and the conduct of activities it performs.
In theory, costs like heat, light, accounting and personnel might be charged directly if little meters could record minutes in a cross-cutting manner. Practical difficulties preclude such an approach. Therefore, cost allocation plans or indirect cost rates are used to distribute those costs to benefiting revenue sources.
A complete version of this policy is online and also pasted below.
New York University School of Medicine
Policy on Facilities & Administrative (F&A) Rates
Responsible Office: Office of Science & Research
Original Issuance: July 1, 2008
Last Revision: July 1, 2008
Contents:
I. Background
II. Policy
III. Federally-Negotiated F&A Rates
IV. Other Applicable F&A Rates
V. F&A Published Rate Exception
VI. F&A Rate Reductions or Waivers
VII. F&A Rate Reduction or Waiver Request Procedures
VIII. F&A Rate Reduction or Waiver Request Criteria
IX. Clinical Trials Defined
X. Questions
I. Background
Facilities & Administrative (F&A) rates (also known as indirect costs or institutional overhead) are costs incurred by the New York University School of Medicine (the School of Medicine) in support of sponsored project activities which are not readily identifiable with a specific sponsored project but are necessary to the general operation of the School of Medicine. The application of these rates allows the School of Medicine to recover certain costs from shared services (e.g. facilities, utilities, libraries, physical plant operation and maintenance, administration, student services, and depreciation for buildings and equipment) associated with externally-funded training, research and other sponsored projects.
The School of Medicine’s F&A and fringe benefit rates for all Federal grants and contracts are periodically reviewed and negotiated in accordance with the Federal government’s Office of Management and Budget (OMB) Circular 21, Cost Principles for Higher Education, with the School of Medicine’s cognizant Federal agency, the Department of Health & Human Services (DHHS). The School of Medicine’s current F&A and fringe benefit rates were negotiated and agreed upon with the DHHS in an agreement dated May 24, 2007 (the Federally-negotiated F&A Rates).
F&A rates represent real costs to the School of Medicine, the recovery of which for all sponsored projects (Sponsored Projects) at the School of Medicine from all Federal, State and Local government sponsoring agencies, foundations and private sponsors (Sponsors) is critical to the financial health of the School of Medicine. Failure to obtain indirect costs at the Federally-negotiated F&A Rates compromises the School of Medicine’s ability to provide resources to investigators in furtherance of the core research mission of the School of Medicine. Further, because the Federally-negotiated F&A Rates negotiated with the DHHS are based on the ratio of direct costs on Sponsored Projects at the School of Medicine to total allowable expenses at the School of Medicine, failure to receive full indirect costs at the Federally-negotiated F&A Rate can result in a reduction in the Federally-negotiated F&A Rate following future negotiations with the DHHS, which can result in substantial real losses to the School of Medicine.
II. Policy
All Sponsored Projects conducted by the School of Medicine must recover, whenever possible, the full applicable Federally-negotiated F&A Rates and fringe benefit rates negotiated by the School of Medicine and reflected in this Policy.
Unless expressly prohibited by a non-profit Sponsor’s written policy, the budget proposal set forth in the Sponsored Project’s proposal submission shall request the full applicable Federally-negotiated F&A Rates and fringe benefit rates negotiated by the School of Medicine regardless of funding Sponsor.
III. Federally-Negotiated F&A Rates
In accordance with the School of Medicine’s agreement with the DHHS, the School of Medicine’s Federally-negotiated F&A Rates are as follows:
1. For research proposal submissions, including for grants and contracts, to Federal Sponsors to be conducted during the period from September 1, 2005 to August 31, 2008, the Federally-negotiated F&A Rate is 69.0%.
2. For research proposal submissions, including for grants and contracts, to Federal Sponsors to be conducted on or after September 1, 2008, the Federally-negotiated F&A Rate is 69.5%.
3. For research proposal submissions contemplating School of Medicine research at the School of Medicine’s Sterling Forest facility, the Federally-negotiated F&A Rate is 60.0%.
4. For non-research activity proposal submissions to Federal Sponsors, the Federally-negotiated F&A Rate is 39.0%.
5. For training proposal submissions to Federal Sponsors, the Federally-negotiated F&A Rate is 8.0%.
IV. Other Applicable F&A Rates
1. For proposal submissions to Federal Sponsors in which federal funds are not received directly from the applicable Federal Sponsors (e.g., sub-grants or sub-contracts from other entities that have received grants or contracts from a Federal sponsoring agency), the F&A Rate will be the applicable Federally-negotiated F&A Rate.
2. For proposal submissions to State government or Local government Sponsors, whether the School of Medicine receives the money directly or indirectly, the F&A Rate will be the applicable Federally-negotiated F&A Rate unless the government Sponsor’s published rate is less (see Section V below).
3. For proposal submissions to for-profit private Sponsors, including industry, other than submissions contemplating exclusively industry-sponsored Clinical Trials (see Section IX below), the F&A Rate will be the applicable Federally-negotiated F&A Rate.
4. For proposal submissions to non-profit private sponsors, including foundations, the F&A rate will be the applicable Federally-negotiated F&A Rate, unless the non-profit private Sponsor’s published rate is less (see Section V below).
5. For proposal submissions contemplating exclusively industry-sponsored Clinical Trials (see Section IX below), the F&A rate will be 30.0%.
6. For unrestricted grants from for-profit private Sponsors, the F&A Rate will be the applicable Federally-negotiated F&A Rate.
V. F&A Published Rate Exceptions
A reduction or waiver of the applicable F&A Rate at the School of Medicine will not be necessary when the proposal submission is to a Federal, State or Local Government Sponsor or to a non-profit private Sponsor and such Sponsor has an explicit published rate lower than the full applicable F&A Rate at the School of Medicine. The School of Medicine will accept a lower publish rate only if the submission of the proposal to the School of Medicine’s Office of Sponsored Programs Administration (SPA), includes the Sponsor’s program announcement or RFP announcing its F&A rate or indirect cost funding policies. The published rate exception shall never apply for proposal submissions to for-profit private Sponsors.
VI. F&A Rate Reductions or Waivers
The School of Medicine’s policy is to apply the School of Medicine’s full relevant F&A rates, as applicable, to all Sponsored Projects. Requests for F&A rate reductions or waivers will be considered and occasionally granted by the Vice Dean for Science in accordance with the procedures and criteria set forth in Section VII below. Very few F&A rate reductions and waivers will be approved.
Other than as specifically provided in this Policy, an F&A rate reduction or waiver will not be granted. In particular, the Principal Investigator and other School of Medicine investigators are not authorized to negotiate a reduction in or waiver of the applicable F&A rates for any Sponsored Project.
VII. Request Procedures
Requests for reductions in or waivers of F&A rates should be initiated by the relevant Principal Investigator and must be approved by the department chair or center director.
Requests for a reduction or waiver then are submitted by the Principal Investigator to SPA for Sponsored Projects involving Federal, State, or Local government Sponsors and Foundation Sponsors, the Office of Industry Liaison (OIL) for Sponsored Projects involving private for-profit Sponsors other than Clinical Trials, or the Office of Clinical Trials (the OCT) for Sponsored Projects that are industry-sponsored Clinical Trials, as applicable. All requests shall indicate the rationale for the request.
Any request for a reduction or a waiver must be transmitted by the Principal Investigator no later than three (3) weeks prior to the applicable proposal deadline. In order to adhere to this deadline, the request for a reduction or a waiver may be included in the submission of the completed proposal to SPA, OIL or the OCT or sent separately from the completed proposal.
SPA, OIL, or the OCT, as applicable, will forward any request for a reduction or a waiver of the applicable F&A rate to the Vice Dean for Science.
The Vice Dean for Science is authorized to grant a reduction in or waiver of the applicable F&A rates in Sponsored Projects in accordance with this Policy.
VIII. F&A Rate Reduction or Waiver Request Review Criteria
The Vice Dean for Science will consider each request for a reduction in or waiver of the applicable F&A rate on a case-by-case basis in accordance with the following criteria:
• The extent to which the benefit of the proposed Sponsored Project to the School of Medicine, in terms of institutional capacity building, exceeds the reduced F&A revenue (including both direct underrecovery and the effect on future Federally-negotiated F& A Rates).
• The extent to which the Sponsored Project funds are to be used solely for student research, fellowships or for materials & supplies for student projects, including both predoctoral students and post-doctoral fellowships, with greater than eighty percent (80%) more likely to justify a reduction or waiver.
• The extent to which the Sponsored Project funds are likely to be spent engaging subcontractors or engaging in off-campus activities, with at least a majority necessary to justify a reduction or waiver.
The Vice Dean for Science will rarely grant an F&A rate reduction or waiver under any of the following circumstances:
• when the Sponsored Project proposal is for research to be funded by a for-profit private Sponsor;
• when the Sponsored Project grant, contract or agreement requires the School of Medicine to indemnify, defend or hold harmless the Sponsor; or
• when the Sponsored Project grant, contract or agreement requires the School of Medicine to give the Sponsor rights to inventions made as a result of the Sponsored Project in excess of the School of Medicine’s standard terms for the applicable grant, contract or agreement.
The Vice Dean for Science will consider F&A rate reduction and waiver requests on a case-by-case basis. F&A rate reductions or waivers will not be granted where the reduction or waiver might reasonably appear to establish a precedent for future Sponsored Projects to be negotiated with the Sponsor in question.
IX. Clinical Trial Defined
Clinical Trials are a subset of clinical research and must include all three of the following factors in order to qualify for the Clinical Trial F&A rate to apply under Section IX:
1. The objective of the study is either:
a. testing of drugs, devices, diagnostics, treatments, interventions, or preventive measures including testing for an unapproved indication; or
b. data collection to increase knowledge that would lead to enhanced safety and efficacy of a specified drug or device; and
2. The study must involve contact with humans or retrospective review of medical records, clinical data or specimens obtained from contact with humans; and
3. The study must be industry sponsored or funded.
X. Questions
Any questions relating to this Policy should be directed to the director of the office reviewing the applicable Sponsored Project: the Director of the Office of Sponsored Programs Administration, the Executive Director of the Office of Industrial Liaison, or the Director of the Office of Clinical Trials.
