I. OBJECTIVE & PURPOSE
This policy sets forth the requirements for the administration and implementation of Facilities and Administrative (F&A) costs (also referred to as indirect costs) and their use at the University of North Florida. This policy is intended to complement the statutory authority provided to the University pursuant to section 1004.22 of the Florida Statutes, and other state or federal statutes, regulations, and laws governing facilities and administrative costs.
II. STATEMENT OF POLICY
It is the policy of the University of North Florida to recover F&A costs (indirect costs) from each sponsored award at the appropriate full rates approved by its cognizant Federal Government agency, unless the Assistant Vice President for Research, in consultation with the Provost and Vice President for Academic Affairs, has approved an exception. Principal Investigators are not authorized to negotiate indirect cost matters with sponsors.
It is also the policy of the University to reserve the first use of recovered F&A costs to cover the costs of sponsored project administration. The University will use the remaining funds from recovered F&A costs to support and stimulate further research directed at increasing external sponsorship of research, training, and community service.
The authority and responsibility for administration and implementation of this policy are delegated to the Assistant Vice President for Research. This policy will be reviewed every five years to ensure compliance with statute and to review its effectiveness at recovering and using F&A to the benefit of the University
This policy applies to all sponsored agreements (grants, contracts, and other agreements) with federal and non-federal agencies.
- "Facilities and Administrative (F&A) Costs (or Indirect Costs)" as defined in the federal regulation on the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Office of Management and Budget (OMB) Circular A-81, are those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a sponsored project, an instructional activity, or any other institutional activity. These costs include general administration, college and departmental administration, sponsored projects administration, building use allowance, equipment use allowance or depreciation, maintenance, and operation of physical plant, library, student services.
- "Modified Total Direct Costs" are defined in OMB Circular A-81 as "consisting of all salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs."
- "Cognizant Federal Agency" is established by the OMB to simplify relations between Federal grantees and awarding agencies (see 51 FR 552). It provides for a single agency to represent all others in dealing with grantees in common areas. In this case, the cognizant agency reviews and approves grantees' F&A cost rates. Approved rates must be accepted by other agencies, unless specific program regulations restrict the recovery of F&A costs. The Department of Health and Human Services (DHHS) is the current cognizant agency for the University of North Florida.
This policy requires all University administrators and Principal Investigators to perform sponsored projects on a full cost-recovery basis. Administrators and Principal Investigators are obligated to ask for and recover indirect costs from sponsors. Full cost recovery is necessary to support the University's physical and administrative capacity to perform extramural projects. Specifically:
- The Assistant Vice President for Research is responsible for:
- Distributing information regarding new or changes in F&A rates.
- Review and approval of all requests for reduction of F&A rates.
- Negotiating with funding sponsors on matters of F&A rates.
- Developing procedures for distributing recovered F&A costs.
- Principal Investigators are responsible for: Using established F&A rates (or approved lower rates where applicable) to budget anticipated project costs. Principal Investigators are not authorized to negotiate F&A rates with sponsors.
- The Director of the Office of Research and Sponsored Programs (ORSP) is responsible for:
- Reviewing individual proposals and awards to determine the applicable F&A rates.
- Ensuring that appropriate F&A rates are applied to all proposal budgets.
- Recovering F&A costs from individual awards at the approved rates.
- Recording F&A costs in the appropriate ledger.
- Reviewing individual awards when F&A rates change to identify those awards that should be changed.
- Distributing recovered F&A costs in accordance with established procedures.
- The Vice President for Administration and Finance is responsible for: Negotiating F&A rates with the cognizant federal agency.
Establishing F&A Rates
The Office of the Vice President for Administration and Finance has the authority to negotiate F&A rates on behalf of the University. Rates are negotiated periodically between the university and its designated cognizant federal agency, the U.S. Department of Health and Human Services (DHHS), based upon actual cost records maintained by the university. The rate calculation follows the federal rules and regulations that govern grants, contracts, and cooperative agreements. UNF prepares its F&A rate proposal and submits it with supporting materials to its cognizant agency for audit review. F&A rates are negotiated with a representative of DHHS and a written agreement is reached and formally approved with appropriate agency and University signatures for implementation.
Through negotiations with DHHS, F&A rates are established for the following types of sponsored projects:
- Organized Research
- Other sponsored activities
- Off-campus activities
Neither UNF nor a sponsor can arbitrarily adjust the university's F&A cost recovery rates. When UNF accepts a project with a reduced F&A rate, it is agreeing to a substantial subsidy of real costs associated with the sponsored activities.
Approval of Lower F&A Rates
The University may approve a lower F&A rate under one of the following conditions:
- A non-profit agency/foundation has an official and publicly disclosed policy on the payment of facilities and administrative costs at a lower rate.
- A federal or state legislation establishing a program, and/or an appropriation act, limits F&A costs.
- An agency of the State of Florida has a published policy that imposes an F&A recovery limit on programs funded with state funds.
- Compensation for the reduction of F&A costs is provided through an administrative allowance as a matter of a funding agency's policy. The allowance will be prorated at the same rate as the F&A distribution.
Note that a subsidy of F&A costs for a for-profit/industry partner would constitute a use of public funds for private benefit and would be an improper use of University resources.
The Assistant Vice President for Research, in consultation with the Provost, may approve the cost-sharing of project costs, including F&A costs, if it is determined to be in the best interest of the University. In such cases, sponsored projects with voluntarily reduced F&A rates will not be eligible for the distribution of recovered F&A costs.
Use of Recovered F&A Costs
Florida Statute 1004.22 states, inter alia, that the F&A costs recovered from grants and contracts to the university shall "be deposited in the permanent sponsored research development fund… (and) shall be applied to the cost of operating the division of sponsored research," and that "any surplus… shall be used to support other research or sponsored training programs in any area of the university."
Accordingly, the University will establish appropriate procedures for the use of funds from recovered F&A costs, consistent with the provisions of the Statute. These procedures will minimally ensure that recovered F&A costs will be used to support the operating costs of the Office of Research and Sponsored Programs (ORSP).
Remaining recovered F&A costs will be used to incentivize and support University research activities according to procedures proposed by the Assistant Vice President for Research as developed in consultation with the Deans and with approval of the Provost and Vice President for Academic Affairs and the Vice President for Administration and Finance.
In accordance with Florida Statutes 1004.22(5), these funds must be used to support research and other sponsored project activities. This includes administrative support for existing sponsored projects or expenses related to the development of new projects. Other allowable expenses, by account category, include but are not limited to the following:
- Summer salary for faculty for research effort
- Supplemental compensation for faculty for research effort
- Student or OPS wages to assist with research and administrative support of sponsored projects
- Travel related to professional development or research development
- Equipment for research
- Memberships and subscriptions
- Publication charges
- Research-related supplies