PENN STATE - RESEARCH ADMINISTRATION
The purpose of this policy is to ensure appropriate recovery of both direct and facilities and administration (F & A) costs associated with various sponsored institutional activities conducted by the faculty and staff of The Pennsylvania State University.
Direct costs are those expenses that are essential to the conduct of sponsored institutional activities and which can be readily attributed and directly charged to specific individual projects. They include expenditures for such items as personnel (salaries and fringe benefits), supplies, equipment, travel, and other direct costs necessary for conducting the sponsored activity.
Facilities and Administrative (F & A) Costs (commonly referred to as "indirect costs")
Facilities and administrative (F & A) costs are those expenses that are essential to the conduct of sponsored institutional activities but which cannot be readily attributed and directly charged to specific individual projects. F & A costs, therefore, include such items as:
- capital expenses associated with laboratory and office space, classrooms, and other facilities
- library services
- administrative services (e.g. accounting, human resources, purchasing, security, etc.); custodial services, building and grounds maintenance, hazardous material handling, etc.
F & A Cost Rates are determined periodically from actual cost records through a detailed accounting procedure specified by federal cost principles. The rates are audited and approved by the federal government. Separate F & A cost rates are calculated for research and instruction, and on- and off-campus sponsored activities. (http://www.research.psu.edu/osp/prepare-proposals/develop-budget/fringe-indirect-costs-f-a)
In accordance with federal regulations, the rates are expressed as a percentage of Modified Total Direct Costs (MTDC) expended, where MTDC represents direct costs excluding graduate assistant tuition remission, charges for patient care, equipment (defined as having an expected life of two years or more and having an acquisition cost of $5,000 or more), plant construction, building amortization, and the portion of each subaward and subcontract in excess of $25,000. (For more detail, see negotiated rate agreement link: http://www.research.psu.edu/osp/prepare-proposals/develop-budget/fringe-indirect-costs-f-a)
Grants, contracts and other agreements that designate Penn State as the Grantee Institution/Contractor are the appropriate mechanisms of support for all sponsored institutional activities at the University. Full recovery of both the direct and F & A costs associated with sponsored institutional activities is expected on all grants, contracts and other agreements that support those activities.
The following guidelines are used for the recovery of F & A costs:
- All University proposed budgets shall include a minimum request for management/administration in a dollar amount equivalent to 15% of modified total direct costs. This request should normally be shown in the other direct cost category. The only exception to this is if the sponsoring agency has specific written guidelines limiting project administration to an amount less than 15%. The budget and budget justification should indicate a dollar amount, not a percentage. The project will be expensed each month for an amount equivalent to 15% (or a lesser percentage allowed by the above exception) of the expenditures. This amount will be income to the management fee account.
- Some Commonwealth agencies specifically permit the University to recover the costs associated with administering a sponsored project. If the costs permitted for administration are greater than minimum established above, then the higher amount or rate should apply.
- Any direct administrative personnel costs to be dedicated to the project and managed by the unit should be included as project personnel under the budget category for salaries and wages, including fringe benefits, and the 15% is still included in the other direct cost category.
- If the Commonwealth specifically states in its proposal guidelines that it intends to finance a grant or contract with funds derived, in whole or in part, from a federal source, University should request full F & A costs at the same level as if the University were contracting directly with the federal agency involved. The University may negotiate the final F&A to a lower rate in certain circumstances on a case by case basis.
- The University recovers a management/administrative fee on Department of Transportation agreements. The fee is established periodically by the Controllers Office. Contact OSP for the current rate.
- For procurement contracts funded under the Commonwealth ITQ (intent to qualify) process, the University shall charge a management/administrative fee at a rate appropriate for procurements. The fee is established periodically by the Controllers Office. Contact OSP for the current rate.
- This policy cannot anticipate all the variations that may arise with Commonwealth projects. In those cases, Units should contact OSP, and OSP and the Controller's Office will determine the appropriate rate that should apply.
- If a Commonwealth agency offers an award without requested F&A, Units should follow the procedures below for obtaining approval to accept less than the requested amount.
Note: An imposition of an overall ceiling on the total amount of award by an agency is not considered adequate justification for a waiver of costs; rather, the scope of work for the project should match the funding available from the agency. Requests for waivers of full cost recovery that are the result of an agency recommending funding at a level less than proposed does not constitute adequate justification for cost sharing; rather the scope of work should be reduced to match the funds recommended for award.
Proposal solicitations in some instances call for institutional cost sharing as a condition for an award. While the University is firmly committed to assisting faculty in the pursuit of outside funding for research initiatives and program development, the resources available for cost sharing are limited. All cost sharing must be approved by an appropriate institutional official who administers the source of funds providing the cost sharing. All cost sharing must be documented in accordance with University and sponsoring agency policy.
Requests for waivers of F & A costs or for institutional cost sharing through the use of F & A costs must be submitted in writing to the Office of Sponsored Programs (OSP). Originating with the PI/PD, such requests shall identify the Principal Investigator, the proposal title, the agency and program to which the proposal is being submitted, the total amount requested, the amount of institutional cost sharing proposed, the amount of cost sharing the academic units involved are providing, and the rationale and justification (such as sponsor's written policy) for utilizing F & A costs for cost sharing or for waiving F & A costs.
It is the responsibility of the College, Institute, or other Administering Unit to:
It is the responsibility of the Office of Sponsored Programs or Office of Research Affairs (if request is to the College of Medicine), or Delegated Representatives to:
It is the responsibility of the Research Accounting Office to:
Effective Date: June 29, 2006
Date Approved: June 28, 2006
Date Published: June 28, 2006 (Editorial changes- November 26, 2013)
Most recent changes:
Revision History (and effective dates):
|top of this policy||GURU policy menu||GURU policy search|
|GURU home||GURU Tech Support||Penn State website|