Facilities & Administrative Agreement
The stated Purpose of OMB Circular A-21 is to establish principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. The principles are designed to provide that the Federal Government bear its fair share of total costs, determined in accordance with generally accepted accounting principles. The Circular goes on to detail the principles, describe costing methodologies, and define allowable versus unallowable costs. A-21 is the federal government's handbook that sets forth the rules governing the eligibility and calculation of costs in support of sponsored projects.
The Facilities and Administrative Rate Agreement (F&A Rate), often referred to as Indirect Costs, is the process of recovering the portion of costs that support sponsored projects, but are not directly charged to sponsored funds. The fringe benefit rate is included on the current agreement.
Facilities & Administrative Rate Agreements
The administrative portion covers costs of such offices as:
- Human Resources
- Accounts Payable
- General Counsel
- Systems Support (part of IRT)
- Risk Management
- Departmental Administration
The Facilities portion covers costs such as:
- Building Depreciation
- Equipment Depreciation
- Public Safety
- Hardware Support (part of IRT)
- Radiation Safety
- Property Insurance
- Safety and Health
- Facilities Department
The process of calculating the F&A Rate is to sum these indirect costs and divide by the base. The base is defined as the major functions of an educational institution. A-21 identifies those functions as 1) Instruction and Departmental Research, 2) Organized Research, 3) Other Sponsored Activity, and 4) Other Institutional Activity. So, simply put, the F&A is calculated as follows:
Indirect Costs Allocable to Organized Research / Direct Costs in Organized Research Base = F&A Rate
If, after consulting the materials provided on this webpage, you have any questions, comments, or concerns, please contact the Office of Research Administration – Financial Compliance.