Current F&A Rates

USU negotiates its F&A Rates with the U.S. Department of Health & Human Services. Our current federally negotiated rates are:

Rate Type	Start Date	End Date	Rate	Location	Activity Type
PRED.	07/01/2026	06/30/2029	47.8%	On-Campus	Organized Research
PRED.	07/01/2026	06/30/2029	24.5%	Off-Campus	Organized Research
PRED.	07/01/2026	06/30/2029	52.6%	On-Campus	Instruction
PRED.	07/01/2026	06/30/2029	26.0%	Off-Campus	Instruction
PRED.	07/01/2026	06/30/2029	29.3%	On-Campus	Other Sponsored Activities
PRED.	07/01/2026	06/30/2029	22.5%	Off-Campus	Other Sponsored Activities

HHS Salary Cap Impact on Indirect Costs

To maintain compliance with the U.S. Department of Health & Human Services (HHS) salary cap limitation, USU is required to adjust our F&A rate to exclude salaries above the cap limitations. As a result, a lower F&A rate must be applied to HHS proposals and awards. The allowable rates for HHS funded sponsored programs are:

Activity Type	On/Off Campus	HHS Allowable Rate
Research	On-Campus	47.60%
Research	Off-Campus	24.30%
Instruction	On-Campus	52.40%
Instruction	Off-Campus	26.00%
Other Sponsored Activity	On-Campus	29.10%
Other Sponsored Activity	Off-Campus	22.30%

Applicability of F&A Rates

USU’s federally negotiated F&A rate must be used on all proposals unless the sponsor has a publicly published policy that limits or disallows indirect costs. Verbal or informal guidance from a sponsor does not justify a lower rate. Principal Investigators are not authorized to negotiate F&A rate reductions with any sponsor.

Sponsored Activity Classification

USU has a federally negotiated F&A rate for three different activity types: Organized Research, Instruction, and Other Sponsored Activities. Organized Research can be further broken down into Basic Research, Applied Research, and Developmental Research. It is essential to determine the correct classification at the time of proposal. The classification is determined by the primary purpose and predominant activities proposed in the statement of work, rather than by the sponsor, funding mechanism, discipline, or project title. The definitions below can assist with identifying the correct classification.

Basic Research

Basic Research is systematic experimental, theoretical, or observational investigation undertaken primarily to increase knowledge and understanding of fundamental principles, phenomena, or observable facts without a specific practical application, commercial objective, or end use in mind. The primary purpose is the advancement of knowledge. In the commercial sector, it advances general scientific knowledge without immediate commercial objectives.

Core Focus: Fundamental knowledge acquisition

Applied Research

Applied Research is systematic investigation undertaken to acquire knowledge or understanding to determine how a specific, recognized need or commercial objective may be met. It bridges theoretical scientific understanding and practical technology deployment.

Core Focus: Targeted problem-solving & recognized needs

Developmental Research

Development Research is the systematic application of knowledge gained through basic or applied research to create, improve, test, or demonstrate new or enhanced products, processes, methods, technologies, systems, or services. It includes system integration and real-world field testing.

Core Focus: Translational design or development of prototypes

Instruction and Training

Instruction and Training includes sponsored teaching, training, curriculum development, or educational activities in which the primary purpose is the transfer of knowledge or skills to learners, whether offered for degree credit or non-credit.

Core Focus: Direct teaching, academic training, and curriculum development

Other Sponsored Activities

Other Sponsored Activities are sponsored programs and projects that are neither Research nor Instruction and Training. These activities primarily provide a public service, community benefit, technical assistance, outreach function, or institutional support activity.

Core Focus: Externally funded non-instructional and non-research programs primarily serving a public purpose or enhancing institutional capabilities.

Quick Classification Guide

Primary Purpose	Classification
Discover new fundamental knowledge	Basic Research
Solve a specific problem through investigation	Applied Research
Develop, improve, test, or demonstrate a product, process, or technology	Development Research
Teach or train participants	Instruction and Training
Provide outreach, service, technical assistance, or community benefit	Other Sponsored Activities

Waivers of F&A

At times, sponsors may have restrictions that limit the F&A rate allowed in the proposal. USU allows a reduction in indirect costs when either of the following criteria are met:

• The request for proposals (RFP) restricts or prohibits reimbursement of USU’s full indirect cost rate.
• The sponsor has a publicly published policy or statute that restricts or prohibits reimbursement of USU’s full indirect cost rate.

If the previous criteria do not apply and the full indirect cost rate will not be used, this is considered a waiver of indirect costs. Waivers of F&A require approval from the lead unit’s Dean/VP and the Vice President for Research (VPR). The Internal Waiver of F&A Form should be attached to the Kuali proposal with a justification for why a waiver of F&A is necessary. Approval of the proposal in Kuali by the Dean/VP, or their appointed representative, constitutes approval of the request to waive indirect costs. SPO will coordinate to receive the approval from the VPR.

Principal Investigators are not authorized to negotiate a reduction or waiver of indirect costs with the sponsor. Should the need for negotiation be anticipated, the PI/PD should contact Sponsored Programs well in advance of budget development and proposal submission. See this webpage for more information about F&A Waivers.

Administrative Fees

In instances where the indirect costs will be waived and/or restricted, an administrative fee should be considered if it is allowed by the sponsor. An administrative fee can be a flat amount, or a flat rate applied to the proposal. USU recommends an admin fee utilizing a rate of 15% to align with the allowable de minimis F&A rate allowed per federal regulations.

Indirect Cost Basis

Modified Total Direct Cost (MTDC) Basis

When USU is able to utilize our full federally negotiated F&A rate, it is applied on a Modified Total Direct Cost (MTDC) basis. This means that certain costs are excluded from F&A. The following categories are excluded from F&A on an MTDC basis:

• Capital equipment (current threshold of $5,000)
• Tuition & fees
• Scholarships
• Fellowships
• Subawards (after the first $25,000)
• Participant Support Costs
• Capital expenditures
• Charges for patient care
• Rental costs

All other costs will be subject to F&A at our full federally negotiated rate.

Total Direct Cost (TDC) Basis

If USU is unable to utilize our full federal negotiated F&A rate, the lower rate will be applied on a Total Direct Cost (TDC) basis unless restricted by the RFP or the sponsor’s publicly published policy. This means that all budget costs will be subject to the allowable F&A rate.

On-Campus F&A Rates Vs Off-Campus F&A Rates

Most sponsored programs will be subject to the on-campus F&A rate. However, at times, the off-campus rate may be appropriate. In order to qualify for the off-campus rate, a project must meet BOTH of the following criteria:

• 50% or more of the project’s budgeted personnel costs are incurred in facilities not owned and controlled by USU
• Space and lease costs are directly charged to the project

The off-campus rate may also apply to county extension agents that work in county offices AND their programs are coordinated and administered in schools and other non-USU facilities. Travel costs and field work do not qualify for the off-campus rate.

All off-campus rate determinations must be approved by SPO prior to proposal submission. To request approval, the Principal Investigator should complete the Off Campus F&A Rate Approval Request Form. The on-campus F&A rate applies to any sponsored project that requires utilization of space owned or leased by USU, USU equipment, or library services.

Cognizant Agency Contact Information

Point of Contact: Lucy Siow
U.S. Department of Health and Human Services, Cost Allocation Services
Bethesda, MD
cas-bethesda@psc.hhs.gov

Frequently Asked Questions

What is F&A?

Facilities & Administrative (F&A) cost - sometimes referred to as indirect costs - represent the real and necessary costs incurred by Utah State University (USU) that cannot be directly charged to a sponsored program. F&A covers real and necessary costs related to supporting compliance and research infrastructure on campus.

Will a new award require use of the new rate if the award notice is received after 7/1/2026?

No, new awards will be set up utilizing the rate included in the proposal. However, if a budget modification is required at the time of award, the rate may need to be updated to the new F&A rate.

What rate applies to competitive renewals, augmentations, and non-competing continuations?

Any new funds (not previously proposed to a sponsor) will be subject to USU’s new F&A rate.

How is F&A applied if the sponsor has an F&A limitation or restriction?

USU adheres to F&A limitations or restrictions as outlined in the Request for Proposals (RFP) or as publicly published by the sponsor. If a reduced F&A rate is being used in a proposal, a Total Direct Cost Basis (TDC) will be applied rather than a Modified Total Direct Cost (MTDC) basis.

If the sponsor has not communicated the restriction in an RFP or publicly published format but is requiring a lower rate an internal waiver of F&A must be approved by the Department Head, Dean/VP, and the Vice President for Research.

What if the sponsor is silent about F&A?

If the sponsor does not provide information regarding the allowability of F&A, USU’s full negotiated rate should be used. PIs are not authorized to negotiate the use of a lower rate with sponsors.

When should I use a TDC basis instead of an MTDC basis?

If USU’s full federally negotiated rate is being applied to a project, an MTDC basis must be used for calculating F&A Costs. If a reduced rate is being applied to a project, a TDC basis should be used.