Direct vs. Indirect Costs

Direct costs are those costs that can be identified specifically with a particular sponsored project, instruction, other sponsored activity or other institutional activityrelatively easily with a high degree of accuracy. 2 CFR Part 220 (OMB Circular A-21) Unallowable Expenses and Activities - April 29, 2003

F&A Recovery/Indirect Costs

The University negotiates an Facilities & Administrative (F&A) cost rate agreement with the Federal Government to recover the costs of facilities and administrative support for sponsored projects.  
The University's Rate is negotiated with the Office of Naval Research as the cognizant federal agency. The agreement can be viewed at the following link: Click Here

Indirect costs are general institutional costs incurred for common and join objectives for example: capital improvements, general administration, sponsored programs administration, department administration, O&M depreciation and library.

UAA's Current Facilities & Administrative rates are:

• Organized Research          34%

• Other Sponsored Activity   33.3%

• Sponsored Training           30%

Calculating F&A

1.) Add all project costs to get your Total Direct Costs (TDC).

2.) Subtract: Equipment (defined as having a useful life of more than one year and an acquisition cost of $5,000 or more per unit)
Capital expenditures,Patient care costs,tuition remission charges,long-term space rental costs,scholarships and fellowships, sub-grant & subcontract portions in excess of $25,000 regardless of period covered.  For example:  If a subcontract is proposed for three years using the same entity at $35,000 per budget year, the F&A rate is applied only to the first $25,000 of Year 1 from your TDC. These items cannot have F&A charged to them.  The remaining amount is your Modified Total Direct Costs (MTDC).

3.) Multiply the MTDC and the F&A rate (34%) this total will equal your F&A costs.

4.) F&A Costs + TDC = Total Project Costs

The University expects the full F&A cost rate to be used on all sponsored projects.  Some sponsors such as Foundations and private industries have written policies that limit or exclude full indirect costs.  The University will accept these rates when the written policy is provided, and attached to the Indirect Cost Waiver which has been approved and signed by the College’s Dean prior to the proposal submittal to OSP.
In unusual circumstances, the PI can obtain a waiver for F&A costs from the Vice Provost for Research and Graduate Studies.  The waiver request is to be made when a proposal is submitted to the funding agency. F&A Exemption Form

F&A on State of Alaska Sponsored Research

For research sponsored by the State of Alaska, the F&A rate is 25% applied to the MTDC (Modified Total Direct Cost) base. For instruction, training, and other sponsored activities, the F&A rate is 12% applied to the MTDC base. For more information, see the attached Memorandum of Understanding between the State of Alaska and the University of Alaska.

Cross-MAU Activities

Some proposed projects that involve more than one Major Administrative Unit (MAU) (UAA, or UAS). A MAU cannot be a subaward in another MAU's proposal. The University of Alaska is considered one organization with a single accounting system and, therefore, does not have an internal subaward mechanism. The Prime MAU should use their F&A rate for the entire proposal unless a non-lead MAU constitutes 10% or greater of the total project activity.  However, sponsor guidelines and requirements are the primary consideration in deciding if it is allowable to use multiple F&A rates. The proposal budget should combine all line items for the MAU's involved with separate MTDC lines for each MAU's F&A Recovery. A separate budget spreadsheet for each MAU and a combined budget should be included to show the breakdown of work and funds requested. For NSF proposals the easiest way is to prepare a collaborative dual submission.  Each MAU enters their budget and the proposals are linked in FastLane and the awards are made to each MAU separately for their portion of the work.

Last update on April 15, 2008
by: Kristi Elkins