REG - 50.03.12 Allowable Costs to Be Charged Indirect Costs (F&A) on Sponsored Projects Regulation

1.  Purpose

The purpose of this regulation is to define the account codes within the Chart of Accounts that can be charged indirect costs (known as the Facilities and Administrative Rate). This rate is negotiated and approved by the Department of Health and Human Services (NCCU’s Cognizant Federal Agency). 

2.  Scope

Applies to all externally funded sponsored project that allow indirect costs to be charged to the fund.

3.  General Principles

3.1       Definitions

3.1.1    Indirect Costs - costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). Indirect costs may be either fixed or variable. 

3.1.2    Account Codes – line items listed within the NCCU’s Chart of Accounts on the Official Account Code Crosswalk that help to identify a specific expense.

3.1.3    Capital expenditures - Building alterations or renovation costs over $25,000.

3.1.4    Cost Base - Consists of project direct costs that are charged Facilities and Administrative (F&A) costs.

3.1.5    Direct Costs - Those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

3.1.6    Equipment - Tangible non-expendable personal property having a useful life of more than one year, and an acquisition cost of $5,000 or more per unit.

3.1.7    Facility & Administrative (F&A) Costs - Costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. F&A costs are sometimes referred to as indirect costs. 

3.1.8    F&A Rate Agreement - The rates and associated cost basis agreed to between the University and the Department of Health and Human Services, Division of Cost Allocation (HHS-DCA). (Please see NCCU’s Negotiated Rate Agreement)

3.19     Fellowships - Awards that consist of a stipend payment from the sponsor to an undergraduate, graduate, professional or doctoral student.

3.1.10  Indirect Costs (IDC) - See Facility and Administrative Costs

3.1.11  Modified Total Direct Costs (MTDC) - All salaries and wages, fringe benefits, materials and supplies, services, travel, and subawards up to the first $25,000 of each subaward (regardless of the period covered by the subaward). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subaward in excess of $25,000 shall be excluded from modified total direct costs.

3.1.12  Salary & Wages - A base type that is used for some federal programs. Salary & Wages are the direct salaries and wages including vacation, holiday and sick pay and other paid absences.

3.1.13  Scholarships - Funding that covers all or a portion of the costs of education under conditions specified by the sponsor. Scholarships may not represent either payment for employment services or for research that is mostly for the University's benefit.

3.1.14  Sponsored Program/Project - An exchange transaction between the University and the sponsor that is not a purchase or sale of goods or services or "work for hire" arrangement, but instead is a mutual exchange involving the University and a sponsor.

3.1.15  Subaward - Binding legal contract between the University and another institution regarding completion of a portion of a sponsored project.

3.1.16  Total Direct Costs (TDC) - A base type that is used for sponsored projects. TDC are all costs directly charged to a sponsored project.

3.1.17  Trainee Stipends - The amounts paid to graduate and undergraduate individuals under fellowships and training grants in accordance with pre-established levels to provide for the individuals' living expenses during the period of training, where there is no employer/employee relationship.

3.1.18  Uniform Guidance - Uniform federal regulations regarding administrative requirements, cost principles, and audit requirements for Federal awards to non-Federal entities.

4.  Procedures

4.1.  The University calculates and includes F&A costs in all sponsored program budgets as set out in the F&A Rate Agreement, unless one of the following applies:

4.1.1    Federal sponsors (including federal flow-through, no matter the pass-through entity type) - Since all Federal awarding agencies must accept negotiated rates and all pass-through entities must honor negotiated rates, the University will accept a rate cap only if the rate is limited by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification, after proper notification to the Federal Office of Management and Budget. Such criteria used to cap the rate must be publicly available.

4.1.2   Non-Federal government sponsors - The University will accept a rate cap if the non-federal government sponsor has a bona fide policy as evidenced by reference to an approved F&A rate established by statute, in the official program announcement, or on the sponsor-approved application form.

4.1.3    Non-profit sponsors - The University will accept a rate cap if the non-profit entity has a published policy as evidenced by reference on the non-profit's website, in the official program announcement, or on the sponsor-approved application forms. Alternatively, if the entity is listed on the non-federal sponsor F&A rate table, the rate listed will be accepted as the rate cap for that sponsor, unless otherwise specified by that sponsor by policy, website, program announcement or application form.

4.1.4    Subawards to another entity - The University will honor an approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal government for the activity proposed. If no such rate exists, the University will include a de minimis indirect cost rate of 10% of MTDC or we will negotiate an appropriate rate.

4.2   Any deviation below the rate in the F&A Rate Agreement will require advanced approval of an F&A waiver by the Office of Sponsored Research and Programs. This approval will only be granted in limited situations. A written request for an F&A waiver must be submitted to the Director in the Office of Sponsored Research and Programs and included with the sponsored project proposal materials.

4.3   F&A rates are applied to the cost base associated with the location and type of project as specified in the F&A Rate Agreement unless a sponsor has a stated cost base in the official program announcement.

4.4   When a non-federal sponsor's policy does not specify a base type, the Total Direct Costs (TDC) cost base applies.

5.  Subawards and F&A Rates

5.1   Outgoing Subawards

5.1.1   When a NCCU Principal Investigator (PI) sees a need or opportunity to include a subrecipient on an upcoming sponsored program, he/she contacts the proposed subrecipient and requests a formal proposal.

5.1.2   The subrecipient then submits a proposal directly to the NCCU PI including a budget, budget justification, scope of work, and letter of commitment signed by an authorized representative of the subrecipient. If the originating sponsor (prime sponsor to NCCU) has instituted a published policy that caps the F&A rate it will award, the University will in turn flow down that cap to the subrecipient. A subrecipient may not request an F&A rate that exceeds this cap in its budget to the University.

5.1.3   The PI then incorporates this into his/her proposal. Each outgoing subaward anticipated in a NCCU budget will have NCCU’s F&A charged on the first $25,000 of the subaward for the competing segment, when the base type is Modified Total Direct Costs (MTDC).

5.2   Incoming subawards

5.2.1   When preparing a budget to a sponsor in which the originating (prime) sponsor imposes an F&A cap, calculate the NCCU budget using the cap, and include NCCU’s F&A Rate Agreement, for reviewers' reference. If no cap is imposed by the prime sponsor, the NCCU budget must include F&A at the full negotiated rate applicable to the project.

5.2.1   In all cases, an F&A cap will be allowed only when it meets the stated exceptions of this regulation. If the lower F&A rate does not meet these exceptions, an F&A waiver request is required.

5.3.   Account Codes

5.3.1   All account codes listed in the Official Account Code Crosswalk for Sponsored Projects or Grants, are eligible for indirect costs to be charged with the exception of the following:

5.3.1.1    Stipends:

5.3.1.2    Equipment:

5.3.1.3   Tuition and Fees: