Facilities and Administrative Cost Recovery and Waivers
Procedure Date: April 2019
Last Review: April 2022
Facilities and Administrative costs (F&A), also called "indirect costs," are real costs that the University of Nevada, Reno (University) incurs when research, education, or outreach projects are performed at the University. These costs include utilities and research administration services and are incurred for common or joint objectives which cannot always be specifically identified with a particular sponsored project.
F&A cost rate agreements are negotiated every four years with the U.S. Department of Health and Human Services (DHHS), Cost Allocation Services. In accordance with the University's F&A agreement, indirect costs are calculated by applying the negotiated F&A rate to modified total direct cost (MTDC) expenditures on each project. In accordance with federal regulations, these cost rates are legally binding.
F&A costs are real and need to be paid, if not by the granting agency then by another source of University funds. The University's ability to invest in research cores, renovation of research space, faculty start-up packages and research administrative staff support depends upon recovering the maximum allowable amount of F&A costs from all grants and contracts.
All sponsored projects are required to charge the full, applicable DHHS F&A rate regardless of the sponsor. This requirement to charge the full F&A rate rule applies to applications and proposals submitted to government agencies, private companies, industrial groups, foundations and other organizations.
Non-Profit and Governmental Sponsors
The University will grant an exception to the policy of charging its full F&A rate for non-profit sponsors and governmental agencies that have an explicit, published policy or statute limiting F&A recovery. As supporting documentation of the F&A restriction, a copy of the published policy or statute must be included with the proposal materials submitted to Sponsored Projects. The reduced F&A rate will be applied to total direct costs unless the sponsor's published policy or statutes dictates otherwise. In this situation, an F&A waiver is not required.
Note: Any limit of F&A recovery must be consistently applied to all recipient support from the sponsoring agency. Behind-the-scenes negotiation by University employees with sponsoring agencies regarding F&A recovery is strictly prohibited and is not binding on the University.
For-Profit Sponsors (including clinical trial projects)
For-profit sponsors are charged the full, applicable F&A rate for the project activity. A subsidy of any cost of the project would constitute a use of public funds for private benefit and would be an improper use of University resources.
In contrast to the policy exceptions outlined above, an F&A cost waiver is an institutional agreement between the University and a sponsor that F&A costs will be charged at less than the University's full, applicable rate. A waiver or reduction shall be granted only under exceptional circumstances and only when the programmatic benefit to the University is compelling and outweighs the institutional benefit of recovering the full cost of conducting the project. An F&A cost waiver or reduction shall not be approved because the principal investigator (PI) thinks this will increase the competitiveness of the proposal or because the total award amount is capped.
A waiver or reduction request must be approved by the associate vice president for research administration prior to proposal submission. Under no circumstances shall F&A cost waivers be considered after an award is accepted by the University.
To request a waiver of or reduction in F&A costs, the Facilities and Administrative Cost Rate Exception Request form (SP-12) must be completed and submitted by the PI along with the proposal and Transmittal form five business days prior to the sponsor's proposal deadline. The F&A Cost Rate Exception Request form must include the signed concurrence of the department chair/director and dean/vice president or center/institute director, acknowledging that the F&A costs waived will be deducted from any allocation of F&A returned to the unit(s) for the years applicable to the award. Voluntary reductions* in F&A will result in no F&A distribution to the dean/vice president, department, or PI.
*Voluntary reductions are F&A waivers requested at the discretion of the principal investigator and are not sponsor-imposed mandatory F&A reductions.