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Facilities and Administrate Rate Proposal

January 17, 2017

The Facilities and Administrative (F&A) rate proposal is one of significant financial importance to the University as it seeks to grow its research enterprise.  An increase of 1% in the University’s rate can equate to approximately $200K to $300K in overhead recovery per year on a permanent basis.  Most people who work with externally funded research awards are quite familiar with the term “indirect costs” and their underlying benefit to research operations and the University’s infrastructure.  As we embark upon or F&A proposal preparation for 2017, we are asking for your participation and cooperation to ensure we are maximizing our rates for the coming years.

Background

The F&A rate proposal at Drexel is negotiated with the Department of Health and Human Services (DHHS).  The proposal is typically negotiated for 3 to 4-year time periods.  Drexel University’s last proposal was submitted in December 2011 using its financial results from FY 2011.  At that time, the University negotiated its rates for 5 years, covering fiscal years 2012 through 2016.  In FY 2016, University leadership decided it was in its best interest to request an extension of the proposal for one year.  That means that instead of the financial results of fiscal 2016 being the basis of our proposal, we would instead use fiscal year 2017.  DHHS approved our request and has allowed us to use FY 2017 as our base year for submitting our rate proposal in December 2017.

Since it has been a number of years since our last proposal, the University has a lot of opportunities to increase its rate.  The addition of the Papadakis Integrated Sciences Building and significant improvements to labs, particularly in Bossone, will contribute greatly to maximizing this rate.  Those of you not familiar with F&A, should understand that our only growth potential in the rate lies in the facilities component.  The administrative component is capped at 26% because of the type of entity we are classified as under federal Uniform Guidance.

FY 2017 Base Year Activities

Space and equipment are critical components of our research enterprise and have a tremendous impact on the Facilities and Administrative rate we are able to negotiate. Therefore, as part of our strategy to maximize our rates in the negotiation of this proposal, we have engaged Maximus as our primary consulting partner. The Maximus team will work closely with the Office of Research, Research Accounting Services and colleges and departments to ensure that the proposal is completed timely and accurately.  Duff and Phelps, formerly American Appraisal, has also been engaged. Their focus will be to conduct a full equipment inventory of the University and the Academy of Natural Sciences in the early spring.

We need everyone’s full cooperation with granting our consultants access to labs so they can inventory your equipment to ensure that it is properly recorded and that any necessary updates are entered into our fixed asset system.  As a result of this full equipment inventory, General Accounting will not be conducting its annual fixed asset confirmation.  Currently, they are busy updating the over 3500 assets that were verified this summer so that the data we provide to our consultants is accurate and up-to-date.

Our third partner in this endeavor is Library Management Consultants who are currently in the midst of conducting a library study that will potentially allow us to further enhance our rate and strengthen our negotiations.

For this proposal, we will rely heavily on space information completed as part of the annual survey conducted by University Facilities and Real Estate and entered into the FM space management system. The F&A proposal team will use this information to populate the Maximus Web Space application. Maximus will then offer training in March 2017 on Web Space to administrators of departments that will be required to complete the space survey in the coming months. Administrators required to attend this training will be contacted in advance and will be able to register via Career Pathway.

A timeline of the F&A proposal activities has been posted on the Comptroller’s website.  Additional communications and updates will be provided throughout the process and targeted to individual areas affected.

We ask, on behalf of the University, for your full support in assisting our team in completing their tasks related to this proposal submission so we can continue to strengthen and grow our research enterprise.

Aleister J. Saunders, PhD

Senior Vice President for Research

 

 

Patricia J. Russo, MBA, CPA, CFE
Associate Vice President and Comptroller