Facilities and Administrative (Indirect Cost) Rates for Federal Sponsored Programs

Dear Colleague:

I want to provide you with an important update about the university's Facilities and Administrative (indirect cost) Rate Agreement. We recently negotiated an extension to our current rate agreement for the period starting July 1, 2011 and ending June 30, 2014, which includes a one-point increase for on-campus organized research from 54.5 percent to 55.5 percent. The extension also assigns provisional rates for periods after June 30, 2014, until our next rate agreement is negotiated.

As you may know, the university receives a Facilities and Administrative cost rate to fund, in part, certain indirect costs related to sponsored program activities supported by the federal government. The Department of Health and Human Services is the cognizant agency that negotiates predetermined rates with the university on behalf of the federal government. A summary of approved federal Facilities and Administrative (indirect cost) rates under our current and new (extended) agreements appears below.

Type of Federal
Sponsored Agreement
Predetermined
July 1, 2008 -
June 30, 2011
Predetermined
July 1, 2011 -
June 30, 2014
Provisional
July 1, 2014 until next rate agreement is negotiated
On-campus:
Research
54.5%
55.5%
55.5%
Instruction
54.0%
54.0%
54.0%
Other Sponsored Activity
30.0%
30.0%
30.0%
Off-campus:
All Programs (including research)
26.0%
26.0%
26.0%

Our new Facilities and Administrative Cost Rate Agreement, dated March 1, 2010, is available as a pdf file on the Financial Operations website at: http://www.finance.umich.edu/finops/programs/indirectcosts.

Proposals for federally supported projects should include the indirect cost rates listed above and be applied to each year for which funding is anticipated. The full recovery of indirect costs is expected on all grants or contracts, up to the level allowed by the sponsor's written policy. As part of its proposal review process, the Office of Research & Sponsored Programs (ORSP) ensures that appropriate rates are utilized in proposal budgets.

Regarding non-federal sponsored programs, ORSP establishes guidelines for expected indirect cost rates, which can be viewed at: http://orsp.umich.edu/proposals/index.html. The ORSP website (http://orsp.umich.edu/) also includes, among other things, information on the proposal preparation and submission process.

If you have any questions or would like more information about the new rates, please contact Rob Barbret, Associate Director of Financial Operations, by email at rbarbret@umich.edu or by phone at (734) 764-9593. You're also welcome to email me at clsoper@umich.edu or call me at (734) 764-7214.

Regards,

Cheryl Soper
Controller & Director of Financial Operations