Understanding Indirect Cost Recoveries FAQs

In order to perform research or other sponsored activities on behalf of federal agencies, universities incur a variety of costs they would not otherwise have, both leading up to and while conducting work on a sponsored project. F&A costs cover a portion of the college’s infrastructure and operational costs related to federally funded activities. Such shared costs include maintenance of labs, utilities such as heat and light, telecommunications, and hazardous waste disposal.

The percentage resulting from the F&A calculation varies from college to college because actual costs vary based on a range of factors that include energy costs for heating and cooling, the age and condition of buildings, and the cost of renovation and construction needed to house certain types of research projects.

Additionally, while Long-form college rates are typically lower than Short-form rates, the Modified Total Direct Cost (MTDC) base to which they are applied is actually much broader than Salary and Wage base applicable to Short-form rates. MTDC includes personal services and other than personal services costs less any unallowables such as entertainment and lobbying expenditures.

For colleges whose total federal direct costs (including federal and federal pass-through monies) are greater than $10 million dollars, the Long-form method may be used to determine F&A cost rates. Where total federal direct costs are equal to or less than $10 million dollars in the fiscal base year, the simplified or Short-form method would apply.

Not necessarily. Other factors can be considered that will allow the college to continue to use the Short-form method.

Your institution must have an awarded grant. DHHS will want to see a copy of the award notice before a F&A rate proposal may be submitted for your college.

A college’s rate is applied to all federal grants for a three or four year period depending on the term negotiated with the institution’s federal cognizant agency. Currently, CUNY Colleges are on a 4 year cycle. The F&A rate is developed and negotiated with the Department of Health and Human Services.

A check of the College’s latest negotiated rate agreement will provide the effective period to which current F&A rates apply.