Facilities and Administrative Costs (F&A)
Sponsored projects include grants, contracts, and cooperative agreements accepted by Oklahoma State University to conduct research, instruction, and other projects. The cost of every sponsored project is composed of Direct Costs and Indirect Costs, also known as Facilities and Administration (F&A). Direct Costs are the costs that can be assigned to a sponsored project relatively easily and with a high degree of accuracy. These costs usually include salaries, wages, benefits, equipment, supplies, and travel associated with the sponsored work. In contrast, F&A Costs represents the universities cost for the sponsored project in providing shared services, facilities, and administrative infrastructure needed to support all projects and thus cannot easily be attributed to a specific sponsored project, program, or research grant.
Oklahoma State Universities currently federally negotiated F&A rates (Fiscal Years 2012 – 2015) for Research, Instruction, and Extension both on and off campus are:
*There are some exceptions to these rates and if you have questions you should contact your Grants and Contracts Specialist.
Facts about F&A:
- F&A income is a reimbursement for expenses already incurred by Oklahoma State University in support of sponsored projects. Oklahoma State University DOES NOT get a check for F&A costs when the project is funded. In fact, we do not receive this funding until after the direct costs are actually expended.
- It is policy (OSU Policies 1-0112, 1-0113, 4-0105) that all grants, contracts, and other sponsored agreements accepted by Oklahoma State University be charged the maximum allowable federally negotiated F&A rate.
- However, not all federally funded projects can be charged the fully negotiated F&A rate. For example, training grants from the National Institutes of Health (NIH) are limited to 8% F&A. The Department of Agriculture has statutory authority from Congress to limit F&A rates to 10 – 30%, depending upon program.
- The figure below shows a comparison of Oklahoma State University’s negotiated F&A rate and effective F&A rate for on campus research over the past 5 fiscal years. Overall, the university recovers less than half of its actual F&A expenses for research conducted on campus. The effective F&A rate reflects the F&A income realized relative to actual project expenditures, excluding equipment, capital expenditures, tuition remission, rental costs for off-campus facilities, as well as the portion of each sub-award in excess of $25,000 (also known as Modified Total Direct Costs or MTDC).
- The following two figures show the negotiated and effective F&A rates for on campus instruction and on campus extension, respectively. As you can see, the effective F&A rate for these two categories is even lower than for research.
- When a sponsor of a grant or contract does not pay the federally negotiated F&A rate, the unrecovered F&A costs (difference between negotiated and effective F&A) do not go away. Oklahoma State University has no choice but to absorb the difference, resulting in diversion of university funds that could be used to support other missions (i.e., research infrastructure, start-up, instruction).