FAQs about the Transition to the New F&A Rates

Page Updated: September 23, 2020

General

1. Why did the rates increase?

The Facilities and Administrative (F&A) rate is negotiated between the University of Wisconsin – Madison (UW) and the Department of Health and Human Services (DHHS) Cost Allocation Services. Before negotiations began, the UW submitted a required proposal documenting the actual costs incurred during FY16 (July 1, 2015 – June 30, 2016) for such items as space, utilities, general purpose equipment, administrative salaries and benefits, etc. Costs in these categories have increased significantly since our previous negotiation in the year 2013. Even with the current rate increases the UW will not be fully recovering the costs for these items.

2. Does the new rate agreement apply to both Federal and Non-Federal projects?

Yes, per UW policy, the new rates apply to all extramurally sponsored projects.

New Proposals

3. When should I start using the new rates in my proposals?

The new rates should be used immediately.

4. I am submitting a supplemental proposal for an existing award. What rate should I use to prepare the budget for this proposal?

Unless sponsor policies state otherwise, supplemental funding will be considered new funding. Any application for new uncommitted funding, such as a supplement, should incorporate the new rates.

Exception: The National Science Foundation has a policy of funding supplemental support using the negotiated indirect cost rate(s) approved at the time of the initial award, so supplemental proposals to NSF should use the original agreement's rates. See NSF PAPPG Chapter X.D.1.d.

If you have questions, please contact the RSP Proposal Team.

5. The research rate changes from one fiscal year to the next. How should I incorporate it in my proposal?

The rate that is effective at the beginning of the budget period (typically 12 months) should be used for that budget period. See below for different examples that illustrate two possible start dates.

Proposal A
Start date May 1st, 2019 (during FY2019)
F&A Rate   Proposal B
Start date September 1st, 2019 (during FY2020)
F&A Rate
Budget Year 1
5/1/2019 – 4/30/2020
54%   Budget Year 1
9/1/2019 – 8/31/2020
55%
Budget Year 2
5/1/2020 – 4/30/2021
55%   Budget Year 2
9/1/2020 – 8/31/2021
55%
Budget Year 3
5/1/2021 – 4/30/2022
55%   Budget Year 3
9/1/2021 – 8/31/2022
55.5%
Budget Year 4
5/1/2022 – 4/30/2023
55.5%   Budget Year 4
9/1/2022 – 8/31/2023
55.5%
Budget Year 5
5/1/2023 – 4/30/2024
55.5%   Budget Year 5
9/1/2023 – 8/31/2024
55.5%
6. What rate should I use for my competing renewal application?

Competing renewal applications should use the appropriate F&A rate specified in the new rate agreement, regardless of the rate that was applied to the previous segment. You should determine when the new segment is expected to start and use the rate that is effective at the beginning of the budget period for that budget period.

7. I'm preparing a proposal budget for my research project. My proposed budget year starts after 7/1/2018. What rate should I use?

You should use the rate in effect at the beginning of each budget period. For budget years that begin on or after 7/1/2018, use 54%. For budget years that begin on or after 7/1/2019, use 55%. For budget years that begin on or after 7/1/2021, use 55.5%.

8. What happens if I am submitting a proposal that includes a budget year starting beyond 6/30/2022?

You should use the rates in place as of 6/30/2022. For example, a research project with a budget period that begins on or after 7/1/2022 should use a 55.5% F&A rate. You will be notified once a new rate agreement is in place.

Submitted Proposals

9. My application was previously submitted at 53% F&A before the notification of the new rates. Will this rate be honored even though the new rate agreement specifies higher rates effective 7/1/2018?

Yes, proposals previously submitted and approved at the 53% rate will be honored for the initial award period or competitive segment, which is a period of years approved by the sponsor at the time of the award. (See #10 below for examples of competitive segments.) However, in some cases, a sponsor may allow the new F&A rate and/or may provide additional funding to support the added cost. Contact RSP for guidance.

Existing Awards

10. How will the F&A rate be applied to a project grant that has already committed multiple periods of support (e.g., NSF, NIH, DOE, NASA, and DED)?

Rates currently in effect on active awards will be continued until the end of the current competitive segment. A competitive segment is a period of years approved by the sponsor at the time of the award. See examples below:

Example 1

Budget Period: 07/01/2018 – 06/30/2019

Project Period: 07/01/2015 – 06/30/2020

Competitive segment: 07/01/2015 – 06/30/2020

Facilities and Administrative Costs Year 1 Year 2 Year 3 Year 4 Year 5
F&A Cost Rate 1 53% 53% 53% 53% 53%

F&A rate in Notice of Award for competitive segment: 53%

The UW will honor the 53% rate as specified in the notice of award for this competitive segment.

Example 2

Budget Period: 07/01/2018 – 06/30/2019

Project Period: 06/10/2000 – 06/30/2020

Competitive segment: 07/01/2018 – 06/30/2020

Facilities and Administrative Costs Year 19 Year 20
F&A Cost Rate 1 53% 53%

F&A rate in Notice of Award for competitive segment: 53%

The UW will honor the 53% rate as specified in the notice of award for this competitive segment.

11. How will the F&A rate be applied to existing federal multiyear contracts?

Federal contracts will continue with the current rate until the end of the period of performance as specified in the agreement. In other words, if the contract defines a specific F&A rate which is locked into the agreement, the specified rate will continue.

12. How will the F&A rate be applied to existing Non-Federal projects?

The rate approved by the sponsor at the time of award will continue for the remainder of the award period.

13. If the F&A rate changes on my award will the internal fund/project number change or stay the same?

In most cases the project number will remain the same, however, there may be special circumstances that need to be evaluated on a case-by-case basis.

14. What F&A rate should be used when submitting a supplemental application under an already existing award?

Unless sponsor policies state otherwise, supplemental funding will be considered new funding. Any application for new uncommitted funding, such as a supplement, should incorporate the new rates.

Exception: The National Science Foundation has a policy of funding supplemental support using the negotiated indirect cost rate(s) approved at the time of the initial award, so supplemental proposals to NSF should use the original agreement's rates. See NSF PAPPG Chapter X.D.1.d.

If you have questions, please contact the RSP Proposal Team.

15. How will RSP handle the set-up of supplements that are funded with the new F&A rates?

To the extent possible, the project number would remain the same. We will need to evaluate these situations on a case by case basis, looking at circumstances such as the timing of supplement, the amount of the supplement, and the amount of the original award.

16. All of the non-Organized Research rates (Instruction, Public Service, etc.) have an effective period going back to 7/1/2017. Will RSP be revising the F&A rates on those types of existing projects retroactively?

No. Existing projects will continue with the current rate as indicated in the award document until the end of the current award period or competitive segment.

New Awards

17. I submitted a proposal with an anticipated start date of June 1, 2019, but I learned that the sponsor will not be issuing the award until August 1, 2019. I built the first budget period with a 54% F&A rate, but when the project starts, a new F&A rate of 55% will be in effect. What will happen in this situation?

The sponsor should use the F&A rate in place at the time the award is made. In this case, the award should incorporate the higher F&A rate in effect on August 1, 2019. The higher F&A rate may necessitate preparation of a revised budget. If you have questions, please contact the RSP Proposal Team.

18.a) I submitted a proposal budget according to the guidance in FAQ #5 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct. 1). The sponsor did not provide any additional funding, so the total awarded budget is the same as the total proposed budget. What happens now?

RSP will accept the award and enter in SFS the budget’s total direct costs and total indirect (F&A) costs as stated in the award notice, but we will set the F&A rate(s) to calculate at the originally proposed rate(s). Doing so will enable the PI to access funding for direct costs as originally planned.

18.b) I submitted a proposal budget according to the guidance in FAQ #5 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct. 1). The sponsor also provided additional funding to cover the higher F&A rates, so the total awarded budget is greater than the total proposed budget. What happens now?

This is a fairly unusual situation, but we will accept the award with the F&A rates as awarded by the sponsor. Since the sponsor provided additional funding to cover the new F&A rates, we will charge the new rates to the project. Additionally, the agency has provided the new rates based on our fiscal year, so that may result in our recovering a higher F&A rate sooner than originally anticipated. It also means that we will apply two different F&A rates at some point during a single budget period.

18.c) I submitted a proposal budget according to the guidance in FAQ #5 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct. 1). The total awarded budget is less than the total proposed budget. What happens now?

RSP will accept the award and enter in SFS the budget’s total direct costs and total indirect (F&A) costs as stated in the award notice, but we will set the F&A rate(s) to calculate at the originally proposed rate(s). Doing so will enable the PI to access funding for direct costs as originally planned and perhaps mitigate the awarded amount being lower than anticipated.

Former UW-Extension Units

19. My unit was previously part of UW-Extension and is now part of UW-Madison. What rates should we use?

Existing awards will continue using the rates at which they were awarded. Cooperative Extension and Wisconsin Public Media should use UW-Madison F&A rates for all proposals going forward. For example, proposals for public service projects should be submitted using a 38% F&A rate, regardless of their start date.

20. My unit was previously part of UW-Extension and is now part of UW System. What rates should we use?

Existing awards will continue using the rates at which they were awarded. Continuing Education and Business and Entrepreneurship should use UW-Madison F&A rates for all proposals going forward. For example, proposals for public service projects should be submitted using a 38% F&A rate, regardless of the start date.

Other

21. I have heard that the Off-Campus Definition is different than it has been in the past. What is the difference?

In the past, off-campus projects had to take place in facilities not owned by the institution AND in facilities for which rent was directly allocated to the project. The agreement signed in October 2018 indicates that for activities performed in facilities not owned by the institution OR in facilities to which rent is directly allocated to the project, the off campus rate will apply.

The other condition in the definition still applies: An agreement will not be subject to more than one F&A rate. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. If less than 50% of a project is performed off-campus, the on-campus rate will apply to the entire project.

22. What F&A rate is applied to carryover funding?

Carryover is subject to the F&A rate in effect when the costs are incurred.