The Facilities and Administrative Cost Rate, or "F&A Rate", is a mechanism whereby the University can be reimbursed for expenses incurred in providing facilities and administrative support to sponsored research and other sponsored projects.

F&A costs are defined in OMB Circular A-21 as those 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."

The F&A rate is essentially an overhead rate, calculated as a percentage of the direct costs of sponsored projects, which is added to the invoices or other billing instruments submitted to sponsors.

Federal Jurisdiction

The policies and regulations governing the establishment of F&A rates at the University of Washington are set forth in Office of Management and Budget (OMB) Circular A-21, "Principles For Determining Costs Applicable To Grants, Contracts, And Other Agreements With Educational Institutions."

The University negotiates its F&A rates with its cognizant agency, the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA), San Francisco region.

The Process in Brief

The University's operating costs for a given base fiscal year are extracted from the central financial accounting system. All current fund expenditures with similar characteristics or purposes are aggregated into common cost categories called "cost pools" and classified as either facilities and administrative (F&A) or direct costs/functions. (see also GIM 22A) The pooled costs are then used to calculate rates that are incorporated into a proposal submitted to DCA. The proposal is the basis for negotiations that determine the actual F&A rates to be applied to grants and contracts.

Space Functional Use

Space data is one of the most important factors in determining the F&A rate, because facility costs are primarily allocated to University functions, such as instruction and research, according to the functions assigned to University space. It is therefore critical that every department or other unit accurately classify its space according to established functional use definitions. Click here for the space survey summary web page.

Cost Categories

Current fund expenditures with similar characteristics or purposes are grouped into common cost categories or "pools". Each current fund budget is classified as containing either direct costs or F&A costs. It is critical that academic units review the cost categories assigned to their budgets in SIMS and correct them as needed. MAA converts cost categories into cost pools defined by OMB Circular A-21 to calculate F&A rates.

Allowable and Unallowable Costs

Specific costs are described in OMB Circular A-21 as allowable or unallowable. None of the "unallowables" may be allocated to research through F&A (indirect) cost pools or directly charged to sponsored programs. A-21 also specifies that for a cost to be allowable, it must be reasonable, allocable, and consistently treated, and it must conform to any limitations or exclusions specified in the sponsored agreement. Click here for a list of unallowable costs.

Proposal Schedule

The current F&A rate proposal is based upon FY 2003 (July 1, 2002 - June 30, 2003) cost and space data. Negotiation was competed in July 2005 and the new rates are in effect through FY 2009. The next proposal will be based on FY 2008 (July 1, 2007 - June 30, 2008).