Facilities and Administrative Costs Policy (Indirect Costs)

Facilities and Administrative costs (F&A), formerly called "Indirect costs" or "IDCs" are actual costs to the University incurred when research, education, or outreach projects are performed at ISU. The F&A rate is negotiated at regular intervals with the U.S. Department of Health and Human Services (DHHS) and includes facilities and administrative components across the University. Effective July 01, 2007 through June 30, 2008 the DHHS-negotiated IDC rate is 46.5% (20.5% derived from facilities costs and 26% capped by the federal government as the maximum allowable for the cost of administration). The rate for off-campus projects is 26%. These rates are applied to the (modified) total direct costs (MTDC) of the project. Modified total direct costs include all direct costs except the costs of equipment, capital expenditures, patient care, tuition, rental costs of off-site facilities, scholarships, and fellowships and subcontracts in excess of $25,000. A new rate is currently under negotiation and will be posted soon. Rules for determining cases in which the off-campus rate applies can be found at http://www.ospa.iastate.edu/Policies/IndirectCost.aspx.

All sponsored projects are required to charge the full DHHS negotiated F&A rate, regardless of the sponsor, unless one of the exceptions below applies. This requirement to charge the full F&A rate rule applies to applications and proposals submitted to government agencies, private companies, industrial groups, foundations, or other organizations. For proposals that meet one of the following pre-approved circumstances, the explanation of the proposed rate must be submitted on the GoldSheet and appropriate documentation must be included to substantiate the exception. All other reductions/waivers not included in the list below must be approved through the department/center, college/institute, and Office of the Vice President for Research and Economic Development. The form for submitting an F&A (IDC) waiver request is found at: http://www.ospa.iastate.edu/Forms/docs/IDCwaiverRequest.doc.

Exceptions

The following exceptions will not be considered a "waiver" and will allow for the normal PI incentive to be distributed to the Investigators:

1. In applications submitted to an external sponsor (federal, state or local governmental agency, or other for-profit or not-for-profit, public or private institution/agency/foundation) where that sponsor has a written policy that limits F&A recovery for all sponsored-project recipients, the published sponsor rate may be used without submitting a waiver request. Documentation of the sponsor policy must be included with the GoldSheet. Unilateral declarations or letters from sponsor administrators about their F&A rates will not, in general, be accepted.
2. The policy of permitting 8% of total direct costs (TDC) F&A from Iowa state government, county and community agencies will be continued, unless proposals are submitted jointly with a state, county, or community agency to a federal agency that allows a higher rate. In those cases, the maximum allowable rate should be used. For projects involving the Iowa Department of Transportation, contact the Director of the Office of Sponsored Programs Administration (OSPA).
3. To support the training of graduate and undergraduate students, an 8% TDC F&A rate may be used on all projects designated as "training grants."  For this purpose, training grants are defined as awards made specifically to or for the benefit of a student or students independent of the investigator for whom they work, i.e., the award is not paying the student(s) salary to work on a specific research project under the direction of the investigator
4. To support new research development at ISU, exploratory projects with a budget of up to $25,000 and a timeline of up to one year may be exempt from F&A. For the purpose of this policy 'exploratory projects' are one-time projects that are expected to lead to larger proposals. Prospects for future funding at higher levels must be detailed in the written description of the project. This exemption does not apply to any sponsors that allow recovery of F&A. Exemptions for all exploratory projects must be documented in the notes section of the GoldSheet and acknowledged by department/institute/center/extension units and RRC signatories in the notes section during the routing process.
5. To support economic development in the State of Iowa, private incubator companies in the State may be exempt from F&A. F&A exemptions for all incubator companies must be documented in the notes section of the GoldSheet and acknowledged by department/institute/center/extension units and RRC signatories in the notes section during the routing process.
6. Companies that are new to Iowa, including out of state companies that open new branches in the State, may receive a reduced rate of 26% TDC during their first two years in Iowa. The F&A reduced rate of 26% TDC for new companies must be documented in the notes section of the GoldSheet and acknowledged by department/institute/center/extension units and RRC signatories in the notes section during the routing process.
7. Reserved. (The University is examining an F&A rate for field trials. This exception will be updated in the Fall of 2008.)
8. In very exceptional cases of great importance to the University, a master agreement can be negotiated with a company.  Part of the master agreement may include the waiver of part of the F&A rate.  The Office of the Vice President for Research and Economic Development in collaboration with College or center/institute officials will be responsible for negotiating all master agreements.  F&A rates negotiated as part of master agreements are considered 'full allowable' overhead by the University. Contact OSPA if in doubt about the existence of a master agreement. 

Private companies, industrial groups, organizations, etc. are expected to pay the full F&A rate of 46.5% MTDC (26% MTDC for off-campus projects).  No negotiations related to F&A costs should be made with companies, industrial groups and organizations by the PIs, their departments, centers, colleges, or institutes unless a formal F&A waiver has been granted in advance.  If necessary, investigators may ask the Director of OSPA for assistance in explaining the F&A policy of the university.  Rate negotiations need to be initiated early enough so that a result can be reasonably achieved before new proposals are submitted to the sponsor.

Waivers

All requests for reductions or waivers of the full F&A rate that are not specifically included in the Exceptions above will require approval by routing the Indirect Cost Reduction or Waiver Form located on the VPRED website at: http://www.ospa.iastate.edu/Forms/docs/IDCwaiverRequest.doc. In all cases where a reduced rate has been approved through this waiver process, the PIs will not be eligible for the return of PI incentive funds.

Any questions may be directed to the Office of Sponsored Programs Administration (294-5225).