Headlines

The Indirect Cost Negotiations are Over!

by Cristi Chapman

In July, Management Accounting and Analysis (MAA) successfully completed negotiation of the University’s Facilities and Administrative (F&A or indirect cost) rates with our largest sponsor, the Department of Health and Human Services (DHHS). Although the actual negotiation took only a morning, the rates were the culmination of many years of work putting together and defending our proposal! The last F&A negotiation took place in the late 1990’s.

The new F&A rate for all on-campus sponsored agreements increased from 51.6% to 55.5% through 2007 and 56.0% for FY 2008 and 2009. In addition, MAA was able to negotiate a new rate for the South Lake Union Biomedical Complex and higher rates for research at the Washington National Primate Research Center. All of the F&A rates will be applicable through June 30, 2009. Grants Information Memo 13A lists all of the new rates. F&A rates are charged to grants and contract awards when those awards incur direct expenditures related to the research.

F&A represents costs which cannot be directly charged to sponsored research agreements but that are integral to supporting the research function. Facilities costs recovered from the F&A rate include things like building and equipment depreciation, operations and maintenance costs (such as utilities and repair costs) and library costs related to research. Administrative costs recovered through the F&A rate include a portion of departmental, college, fiscal and general university staff salaries, such as Office of the President, Provost, and Executive Vice President. Because many of the Executive Vice President’s functions support the research function, a portion of that funding comes from the F&A recovery.

In FY 2005, the UW received over $182 million in indirect cost. Higher F&A recovery translates into increased funding of critical research infrastructure.

Although our new rate agreement is in effect through June 2009, we have already begun planning for the next F&A proposal. Our next indirect cost change takes effect on July 1, 2007!