FACILITIES & ADMINISTRATIVE (F&A) COST RATE AGREEMENT

10/31/01: Replaces prior DHHS agreement dated June 23, 1999
06/02/03: UCSF guidance replaced
03/17/04: DHHS Agreement date updated
01/11/06: updated

The Regents and the Department of Health and Human Services (DHHS) have signed a new Facilities & Administrative Cost Rate Agreement. These rates should now be used on proposals submitted to government or non-profit agencies that do not have an approved indirect cost policy waiver in place. The San Francisco campus rates are printed below for immediate use with all new, renewal, revision and competitive supplement grant, contract or subcontract proposals with a start date of December 14, 2005 or later. Use "December 14, 2005" as the DHHS agreement date on the NIH application checklist page, or when an agreement date is requested by other funding agencies.

*Modified Total Direct Cost Base (MTDC) is the Total Direct Cost (TDC) less expenditures for:

1. Equipment cost of:
   
   1. purchase including shipping and sales tax of tangible, non-expendable personal property having a useful life of more than one year and an acquisition cost of $1,500 or more per unit until June 30, 2006 and $5,000 beginning July 1, 2006. This includes software costing $1,500 or more per copy license through June 30, 2006 and $5,000 thereafter (including the cost of sales tax, shipping, and any installation charges).
   
   
   
   2. fabrication of equipment as defined in the UC Office of the President Accounting Manual Chapter P-415-32, Section II.
   
   
2. Alterations and Renovations.



3. Patient Care Costs - costs of hospitalization and other routine and ancillary services provided by a hospital or clinic to patients participating as research subjects. Routine and ancillary services provided by academic departments or units and which are covered by the DHHS negotiated Patient Care Rate Agreement (generally, those services which are billed through UCSF Medical Center) are considered patient care costs. For detailed guidance on treatment of services provided at the UCSF Medical Center or at SFGH, please refer to http://www.research.ucsf.edu/cg/memo/cgPatRecharges.asp. Patient care costs do not include services provided by commercial laboratories which must be budgeted in the "Other Expenses" category and assessed F&A costs.



4. Off-campus rental of space and related maintenance costs (janitorial, utilities) but only if they are included in the rental agreement.



5. Tuition and fee remission (including graduate student health insurance).



6. Scholarships and fellowships - financial aid paid directly to University students (stipends, scholarships and fellowships). This category does not include any disbursement of salaries and wages.



7. That portion over $25,000 of each subcontract with a third party, including (effective 7/1/2000) the UC/DOE Laboratories (Lawrence Livermore, Lawrence Berkeley, and Los Alamos National Labs). F&A costs are assessed on the first $25,000 during each competitive project period. When issuing multiple subcontracts to the same institution, exclude that portion over $25,000 of the combined amount of all of the subcontracts to that institution.
   
8. The total costs of any subcontract to another UC campus.

* For GCRC awards, the MTDC base includes all exclusions listed above (1-8) plus salaries and fringe benefits for nurses, bionutritionists, ward clerks, and social workers supported as a direct cost to the grant.

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USE OF F&A COST RATES IN GRANT AND CONTRACT PROPOSALS

Escalating Rates: If a budget proposal period covers two UC fiscal years (i.e. 10/1/05 - 9/30/06), a combination of the two rates should be used in proposals (i.e., 9 months @ 51.5% for on campus research and 3 months at 53.5%). Note that the UCSF fiscal year runs on a July 1 to June 30 basis. When expressing the use of multiple rates on either a budget page or on the NIH checklist page show both of the rates being used; do not show a composite rate.

Training Awards: When preparing NIH Career Development (K award) proposals, a rate of 8% MTDC should be used. NIH Institutional National Research Service Award proposals (institutional NRSA training grants) should use a rate of 8% on TDC less tuition and related fees, health insurance, equipment and subcontracts in excess of $25,000.

Application of On-Campus and Off-Campus Rates: If a project is conducted partially on-campus and partially off-campus, either the on- or off-campus rate should be applied based upon where the majority of the work of the project is to be performed. Salary cost should be used as the term of measurement.

If all of the following conditions are met, simultaneous use of both an on-campus and off-campus rate for a project may be allowable for any given year:

• the project is significant (total salaries, excluding fringe benefits, for the project exceed $250,000/year);



• the on-campus and off-campus portions can be clearly identified by means of separate budgets;



• and the direct costs associated with each portion of the project must total at least 25% of the direct costs of the annual budget.

When applying the above criteria all subcontract costs shall be excluded, and each year of the project requires separate analysis. Formal approval of the use of both an on- and off-campus rate for a competitive project is required from C&G, and such approval must be obtained before a proposal may be submitted to a sponsor.

Multi-Center Projects with Clinical Components: When determining the type of project and the appropriate F&A rate to be used for large multi-center proposals which include clinical components such as cooperative agreements, only the portion of the work performed at UCSF, minus all subcontracts, should be considered. It should then be determined if the project scope of work is primarily for performance of clinical trial activities (as defined below), or for research. This determination is made by comparing the total dollar amounts paid for salaries associated with clinical trial work to salaries associated with research and related coordination activities.

• If the preponderance of salaries are for clinical trial related work, then the project should be categorized as a clinical trial and a clinical trial F&A rate applied.



• If the preponderance of the salaries are for research and related coordination activities, then a research definition should be applied and the correct research F&A rate should be used.

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TYPES OF PROJECTS

The following are definitions of the types of projects covered by this memo. The codes Research (R), Instruction (I), Academic Support (AS), or Public Service (PS) appearing below designate the financial system function associated with the DPA number that will be linked with the project fund number if an award is made.

Sponsored Research (R): The separately budgeted and accounted for research under a contract or grant made in support of investigation or experimentation aimed at the discovery and interpretation of facts, revision of accepted theories in the light of new facts, or the application of such new or revised theories. Includes basic, applied and developmental research.

Instruction (I): A contract or grant awarded to support costs of training University of California students, personnel, or prospective employees in research, or in the techniques or practices pertinent to the delivery of health services in the particular area of concern. Instruction awards include NIH career development awards (K awards) and similar kinds of awards from private sponsors, such as a private award to a faculty member, where the program announcement states that the grant is for faculty "career development", "scolarship", "training" or fellowship" purposes.

Fellowship (I): A stipend award made to support a registered UCSF postdoctoral scholar.

Other Sponsored Activity awards: An award for an activity other than research or instruction. These include:

Public Service (PS): A contract or grant award to educate, train, or disseminate information to a primarily non-UC, sponsor-designated group of recipients. Awards of this type are frequently from federal, state, municipal or county government agencies. Conference awards are included under this project type. Examples are training of city or county staff on new procedures for HIV prevention or a state funded poison control center.

Clinical Trials (R): An award given specifically for:

1. The controlled, clinical testing of Investigational New Drugs (INDs) or Investigational Devices (IDEs) using either a sponsor or investigator developed protocol under an FDA Phase I, II, III, or IV drug study or an FDA-regulated medical device study; or The controlled, clinical testing of a protocol performed under the sponsorship of an approved national cooperative consortium for clinical trial services.
   
   Ancillary studies at UCSF that support an FDA-approved clinical trial being performed at an outside agency, or under a clinical trial sponsored under the direction of an approved national cooperative consortium, can be classified as a clinical trial.

Projects involving animal subjects should not be classified as clinical trials.

Other Clinical Service (AS): A one-time sale of a pre-developed clinical test or clinical evaluation service (such as radiograph review, MRI screening) by a UC faculty member and associated staff. If the test is modified, improved or developed in any manner in order to provide the service, then the agreement is classified as sponsored research.

This other clinical service definition also includes the provision of medical/patient care services to a non-UC, sponsor-designated group of recipients. Awards of this type are frequently from federal, state, municipal or county government agencies. Examples are a city HIV screening clinic or provision of mental health services.

Equipment (I): An award solely for the purpose of purchasing equipment items.

Other (Usually AS): This category covers awards which may not clearly fit within other categories (for example a travel grant). Program evaluation awards are also included in this category. A program evaluation award is defined as an award to evaluate a sponsor's program or a sponsor-designated program (for example, an award to evaluate a Medicare program). If an evaluation award includes actual performance of plans to improve, modify or develop a program which has been evaluated, and the majority of the work under an award is for these activities, the award should be classified under the appropriate activity category of Instruction, Research, or Public Service (i.e., whichever best reflects the actual performance).

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ACCOUNTING IMPLEMENTATION GUIDELINES
FOR NEW AND ONGOING AWARDS

The new F&A rates will be implemented by the Accounting Office as follows:

Federal Grants and Contracts

F&A rates for federal grants and contracts awarded prior to January 1, 2006 will remain fixed at the rate(s) in the original award notice for the total project period stated in the award notice.

The new F&A rates are effective as of December 14, 2005, the date that the DHHS, Division of Cost Allocation, Western Region has signed this rate agreement. will be input into the accounting system as each award notice arrives for all competitive federal grants and contracts awarded on or after December 14, 2005. Competitive federal grants and contracts include new, renewal, revision or competitive supplement awards. Should a competitive award notice be received which improperly utilizes expired F&A rates, OSR will contact the federal agency to obtain a corrected award notice.

For competitive federal grants and contracts awarded on or after December 14, 2005, 2006, F&A rates will increase each July 1 in accordance with the terms of the F&A Cost Rate Agreement. For example, the F&A rates for an on-campus four year research award starting in January 1, 2006 will be 51.5% for the period 1/1/06 - 6/30/06, 53.5% for the period 7/1/06 - 6/30/07, 54.0% from 7/1/07- 6/30/08, and 54.5% until the end of the competitive period of the award.

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Subcontracts under Federal Grants and Contracts

F&A rates for subcontracts under federal grants and contracts with start dates prior to December 14, 2005 will remain fixed for the life of the prime agreement (i.e., through the competitive period of the prime award) at the earlier expired F&A rate agreement.

The new DHHS-negotiated F&A rates will be input into the accounting system for all new, renewal, revision or competitive supplements with start dates on or after December 14, 2005 as described above for federal grants and contracts. However, if a new subcontract award with a start date of December 14, 2005 or later is received which has been issued at an expired F&A rate, the PI or department administrator will need to coordinate with C&G on procedures for requesting the new DHHS rates from the subcontracting agency. Should the subcontracting agency deny the request, exceptions may be granted on a case-by-case basis by C&G to allow use of the expired rates.

Non-Profit Grants and Contracts

The rules for federal grants and contracts described above will apply to those awards which do not have an F&A waiver in place.