Section G of A-21 (Continued)

The Federal Government has capped the amount of F&A costs that can be charged for administration at 26% while that portion of the F&A that is associated with facilities is not capped. As a result, it has become critical that Operations and Maintenance, which includes utilities, building maintenance, equipment repair and replacement, among other things, be tracked as accurately as possible to ensure the full value of these costs. When these costs are paid directly by the Federal Government they must be excluded from the indirect cost rate base. 

While indirect cost that is not recovered is counted as cost sharing, it is not included in the research expense base so it does not adversely affect our indirect cost rate calculations. On the other hand, research effort that is not supported by the grant (see section on cost sharing) is included in the research expense base. This has the effect of reducing the increasing the base (denominator in the F&A rate calculation) and decreasing the maximum F&A rate the institution can charge. This in effect of forces the institution to pay twice, once by paying the actual cost of supporting the research program and again in the lost F&A cost recovery.

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