Facilities & Administrative Costs (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. These costs are essential to maintaining the institutional infrastructure that allows sponsored projects to be proposed, awarded, conducted, and managed in compliance with sponsor and regulatory requirements.
F&A costs do not represent discretionary funds or profit. Rather, they are a mechanism by which the University recovers a portion of shared costs that cannot be directly and solely attributed to a single project but are required to support all sponsored activities.
Current F&A Rates
USU negotiates is F&A Rates with the U.S. Department of Health & Human Services. Our current federally negotiated rates are:
FY2026
| Rate Type | Start Date | End Date | Rate | Location | Type |
|---|---|---|---|---|---|
| PRED. | 07/01/2025 | 06/30/2026 | 46.0% | On-Campus | Organized Research |
| PRED. | 07/01/2025 | 06/30/2026 | 21.3% | Off-Campus | Organized Research |
| PRED. | 07/01/2025 | 06/30/2026 | 50.2% | On-Campus | Instruction |
| PRED. | 07/01/2025 | 06/30/2026 | 26.0% | Off-Campus | Instruction |
| PRED. | 07/01/2025 | 06/30/2026 | 27.8% | On-Campus | Other Sponsored Activities |
| PRED. | 07/01/2025 | 06/30/2026 | 21.8% | Off-Campus | Other Sponsored Activities |
FY2027
| Rate Type | Start Date | End Date | Rate | Location | 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:
FY2026
| Project Type | On/Off Campus | HHS Allowable Rate |
|---|---|---|
| Research | On-Campus | 45.80% |
| Research | Off-Campus | 21.10% |
| Instruction | On-Campus | 50.20% |
| Instruction | Off-Campus | 26.00% |
| Other Sponsored Activity | On-Campus | 27.60% |
| Other Sponsored Activity | Off-Campus | 21.60% |
FY2027
| Project 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.
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 negotiate 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.
All off-campus rate determinations must be approved by SPO prior to proposal submission. To request approval, the Principal Investigator must submit a written request to their unit’s SPO Pre-Award Contact, including documentation describing the off-campus components and justification that supports why the project should be classified as off-campus. Support materials should include a Statement of Work delineating the off-campus nature of the project and a budget illustrating the off-campus personnel costs.
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.
When does the new F&A rate take effect?
USU has a new F&A rate that is effective 7/1/2026. Any proposals submitted into routing with a project start date of 7/1/2026 or later must utilize the new F&A rate for full duration of the proposal.
What rate should I use if my proposed project starts before 7/1/2026?
If the proposed project has a start date prior to 7/1/2026, the FY2026 F&A rate should be used in the proposal. The F&A rate for future budget periods will need to be manually adjusted to apply the old rate for the duration of the project.
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 F&A is being reduced, it will be applied on a Total Direct Cost Basis (TDC) 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.