University of Georgia: Office of the Vice President for Research:: Policy on Facility and Administrative Costs

Facilities & Administrative (F&A) costs are institutional costs which are not readily identifiable with a particular project or activity but which are nevertheless necessary to the general operation of the institution and to the conduct of each of the activities performed. They include an allotted share of such items as operation and maintenance of the physical plant; departmental, school and college, and institutional administration; library operations; charges for use of equipment and facilities; and certain general expenses attributable to sponsored programs. Unless institutions are reimbursed for the F&A incurred in behalf of sponsored activities, resources provided for other educational objectives must be diverted to this purpose. This fact is generally recognized and accepted by representatives of the major agencies sponsoring activities at colleges and universities, and unless they are otherwise prohibited or limited, all are expected to pay their full share of project costs, both direct and indirect.

F&A rates are determined in accordance with cost principles promulgated by the federal government and as a result of audit and negotiations conducted by an agency designed as cognizant for the University. The University of Georgia’s cognizant agency is the Department of Health and Human Services (DHHS). Rates are published by means of Contracts and Grants memoranda, and the current rates may be found at http://www.ovpr.uga.edu/sponprog/awardadmin/costrate.html#1.

It is the policy of the University of Georgia to provide for the full recovery of Facilities and Administrative (F&A) costs in all proposals submitted to prospective sponsors. Exceptions to this general rule, which may be authorized by the cognizant Vice President, are as follows (1, 2, and 3a do not require written VP approval; 3b through 6 require written VP approval):

The legislation establishing the program and/or the appropriation act providing the funding precludes or limits the award of F&A costs.
The funds are in the nature of a gift in support of a State-funded on-going project, as is often the case with research conducted by the Agricultural Experiment Stations. For the purpose of this subparagraph, a gift is defined as a voluntary transfer of monies or other personal property from one person (natural or artificial) to the University or a component thereof without compensation or consideration. While the donor may restrict the purpose of the gift, there must be a complete renunciation of rights. If the donor retains patent, copyright, license or other rights in intellectual property including the right to review paper related to the research prior to publication, the agreement does not qualify as exempt under this subparagraph.
a. It is the written, established policy of the prospective sponsor, typically a non-profit foundation or association, not to award F&A costs or to limit the award on the theory that the University should share to this extend in the total project costs.

b. For-profit companies or organizations are not included under this exemption, even if they have written policies stating they do not award F&A costs. Granting waivers of F&A costs to for-profit entities means that taxpayers in the State of Georgia are subsidizing for-profits. Such exceptions will occur rarely, if granted at all.
Compensation for the indirect cost waiver is provided through other means, as a “cost of instruction” allowance.
Substitution of an alternative rate or base results in a more equitable allocation and recovery.

Clinical trials represent an example of an alternative rate. The University has adopted a special F&A rate for use with clinical trials that is in keeping with clinical trial F&A rates at other research universities. It is 25% TDC, and it can only be used with for-profit sponsors (i.e., Federally sponsored clinical trials are to be budgeted at the Federal research rate). The clinical trial rate will only be allowed for clinical trials—clinical research conducted for any sponsor is expected to carry the institution’s negotiated research rate. Guidelines for differentiating clinical trial projects from clinical research projects may be found at (insert web site when these guidelines are worked out).
In addition to exceptions listed above, the cognizant Vice President may waive any portion of F&A costs if it is determined to be in the best interest of the University.