F&A Announcement

This is to announce that new facilities and administration (F&A, known
customarily as “indirect cost”) rates have been just finalized by the
federal government for fiscal year 2009. These newly negotiated rates will
be included in proposals for NEW funding and competing continuations. The
new F&A rate is 50% of modified total direct cost (MTDC) for on-campus
work. The off-campus rate continues to be capped at 26%. MTDC is the base
to which the indirect cost is applied. The base excludes subcontract
amounts above $25,000, equipment and tuition. No existing grants and
contracts will be affected and F&A costs will continue to be applied at the
rate listed in the individual grant or contract award document.

Our latest F&A rate agreement includes, for the first time, uncapped F&A
rates applicable to DOD contracts only. These uncapped rates are 60% MTDC
on campus and 35% MTDC off campus. Another type of F&A rate added this year
is 3% for Intergovernmental Personnel Act (IPA) agreements.

There are two other changes in addition to the new F&A rates. First, based
upon actual cost, the fringe benefit cost applied to PRT will be increased
to 31.9%. The new amount will be applied to release time charges, even
where the former rate was budgeted. While the benefits cost increase was
approved for release time amounts in fiscal 2008, it will not actually be
applied until July 1, 2008. The second change is increasing the ODURF
equipment threshold to be consistent with that of ODU. The cut off point
between supplies and equipment will now be $5,000 henceforth for both
organizations.

Examples of negotiated F&A rates at other institutions are: Virginia Tech
(60%), MIT (65%) and University of Illinois (63%). Unless the particular
program has a limit on the total amount of funding that may be requested,
F&A rate increase does not reduce the amount available for research.

Increased F&A rates are directly attributable to our collective success as
an institution. The biggest changes from the last F&A rate proposal
submitted in 2002 were in building depreciation, equipment depreciation and
operations/maintenance. The rates reflect enhancement of the University’s
infrastructure from the cost of building, occupying and maintaining new
construction. They also reflect the emphasis given research by locating
externally funded work in newer buildings.

If you have any questions regarding implementation of this change, you may
contact Mr. Julian Facenda at jfacenda@odu.edu.