F&A is the new terminology used to identify costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. F&A costs are synonymous with “indirect” costs and “overhead” costs. These are are actual costs to the university and directly support research at Georgia Tech.
F&A costs are collected retroactively; that is, this year’s F&A cost recovery reimburses Georgia Tech for audited expenses incurred last year for all sponsored research.
How is F&A Rate Calculated?
F&A Rates are developed under the requirements of the U.S. Office of Management and Budget Circular A-21, Cost Principles for Educational Institutions. The rates are calculated according to the F&A Cost Rate Agreement for Georgia Tech Research Corp. and negotiated with our cognizant federal audit agency, the Office of Naval Research (ONR). Our F&A rate is reviewed on a yearly basis by ONR. The appropriate F&A cost rate are based on Modified Total Direct Costs (MTDC) which is the total direct cost less equipment over $5,000, patient care costs, participant support costs, alterations/renovations, rental of off-campus space and subcontract expenses in excess of $25,000, student stipends and tuition (see “budgets” for more details).
The F&A rates allocable to each of the above activities are calculated by the development of “pools” of F&A costs (the numerator) and of allocation bases for each activity (the denominator). The pooled dollars are divided by their respective bases, resulting in the dollars allocable to that activity. The dollars are then divided by a “distribution base” from which a rate results. That rate represents the percentage which must be added to direct cost dollars to represent the “burdened” cost of the project or activity.
F&A calculation
What does Georgia Tech do with the F&A costs it recovers from my grants and contracts?
Facilities & Administrative Costs reimburse the Institute for the real costs associted with performing research that are not specifically allocable to a single project. Such costs include utilities, buildings and facilities costs, information technology infrastructure, department and central administrative costs associated with managing externally funded projects and libraries. Most of the recovered funds are returned to Georgia Tech’s operating fund where the costs were originally incurred. A portion is retained by GTRC and used by Georgia Tech to support research infrastructure through matching equipment, cost sharing, allocations to the colleges and other forms of reserach support. Recently the F&A costs used directly for support of research infrastructure have averaged $7.0 million per year; approximately $3.0 million per year is allocated directly to the colleges.
Where can I find more information on F&A?
In 1998, Congress directed the White House Office of Science and Technology Policy (OSTP) to conduct an analysis of issues related to the ways universities recover the facilities and administrative costs (also known as indirect costs) they incur when performing research under federal grants and contracts. At OSTP’s request, the RAND Science and Technology Policy Institute prepared this report to present objective information on facilities and administrative costs in U.S. higher education. This report addresses the issues raised by Congress, although its scope is limited to presenting factual information and analysis of alternatives. It does not take positions on policy options. The report should be of interest to scientists, higher education administrators, and federal, state, and local governments.
Read more: RAND’s Paying for University Research Facilities and Administration by Charles A. Goldman, T. Williams with David M. Adamson, Kathy Rosenblatt
Read more: The Council on Governmental Relations’ (COGR) The Politics of Indirect Costs by Robert M. Rosenzweig
The current F & A rates are posted here.