What is F&A?
F&A (also known as "overhead," “indirect costs,” or “IDC”) refers to two broad categories of expenditures: facilities and administrative.
- Facilities includes the depreciation of buildings and equipment, utilities, operation and maintenance, and library expenses
- Administrative includes human resources, procurement, office supplies and general purpose equipment, sponsored projects administration, and departmental administration
These are real expeditures borne by the institution for costs that are not easily assignable or precisely measured, and therefore are not allowable as direct charges to sponsored projects.
TDC, MTDC, Etc.
F&A is calcluated on a pre-defined base of expenses. Most of UMCES F&A is calculated on the defined base known as MTDC, Modified Total Direct Costs. MTDC includes all expenditures charged to a grant, except equipment, tuition, rental of off-campus facilities, capital expenditures (including alterations and renovations), scholarships & fellowships, the portion of each subcontract in excess of $25,000, participant support costs, and UMCES research vessel operations. TDC, or Total Direct Costs, means that F&A is charged on everything. We usually see TDC in agreements only when the rate is limited by the sponsor, and often not even then. There can be other base-types as well, such as F&A charged only on salary. The majority of our research, however, uses the MTDC base type.
UMCES has a federally-negotiated F&A Cost Rate of 53% MTDC for work done on-campus (or in buildings owned/leased by UMCES) and 26% MTDC for work done off-campus. Our cognizant agency (the federal agency with whom we negotiated our rate) is the Department of Health and Human Services.
When do I include F&A in my proposal?
You should always include F&A in your proposal whenever it is allowable by the RFP (Request For Proposal). In fact, it is UMCES policy that we request our full federally negotiated rate unless prevented from doing so by explicit agency / solicitation guidance. If you believe your proposal should be submitted with a reduced F&A rate when there is no explicit reason (ie, in the written agency policy or solicitation), you may request an F&A waiver.
The process for requesting an F&A waiver is described in the UMCES policy as follows:
F. Waiver Request for Extraordinary Circumstances – When a faculty or staff member feels there is an extraordinary justification to budget an F & A cost rate at less than the UMCES rate in effect at the time, a waiver may be requested.
- Such requests are to come forward to the Office of Research Administration & Advancement and must include:
b. The support and endorsement of the Laboratory, Sea Grant or other unit Director. Waiver requests will not be considered without such support.
- Waiver requests must be submitted and approved before the proposed budget which is to include a waiver of F & A is presented to the sponsor, even informally.
- Final approval of waivers is granted by the President or designee.
This translates to sending a formal letter addressed to the Director of ORAA who will then present it to the President for consideration. The Lab Director's approval can be obtained either via a countersignature on the request letter or by having the Lab Director forward the request via email.