6002 Application of Facilities and Administrative Rates and Costs Recovery

Responsible Official: 
Executive Director, Office of Sponsored Projects
Responsible Office: 
Office of Sponsored Projects
Effective Date: 
April 19, 2022
Revision Date: 
May 9, 2022

Policy Sections

6002.1 Sponsored Award Proposals

6002.2 Federally Approved Facilities and Administrative Rates

6002.3 Federally Sponsored Training Awards and Other Programs

6002.4 State of Connecticut Awards

6002.5 Corporate Funded Contracts, Excluding Clinical Trials

6002.6 Industry Funded Clinical Trials

6002.7 Non-Profit Sponsors

6002.8 Non-U.S. Governmental Agency Sponsors

6002.9 Awards Transferred to Yale

Scope

This policy applies to all sponsored awards received by Yale University.  It applies to all Yale individuals and offices involved in creating sponsored award proposals and administering sponsored awards.

Policy Statement

Yale individuals and offices must apply the appropriate Facilities and Administrative (“F&A”) Rate in all proposal submissions and, absent written permission as allowed under Special Situations & Exceptions of this policy, charge the appropriate F&A Rate for the activity(ies) being performed on sponsored awards for which they are responsible, as described in this policy.

Reason for the Policy

The recovery of Facilities and Administrative Costs through application of appropriate Facilities and Administrative Costs Rates reimburses Yale for infrastructure and operational costs that support the University’s research enterprise.  This policy ensures the appropriate recovery of Facilities and Administrative Costs relating to sponsored awards.

Definitions

DoD Contracts

Contracts awarded by the U.S. Department of Defense.

Facilities and Administrative Costs (“F&A Costs”)

Costs associated with providing and maintaining the infrastructure that supports the research enterprise (e.g., buildings and their maintenance, libraries, etc.) and that cannot easily be identified with a specific award or project.  F&A Costs are also known as indirect costs or overhead costs.

Facilities and Administrative Costs Rate (“F&A Rate”)

The percentage applied to eligible direct costs of sponsored awards in order to recover the allowable F&A Costs associated with conducting Organized Research and Other Sponsored Activities.  These rates are contained in the periodically negotiated Yale University Rate Agreement.

Instruction

Specific instructional activity established by a sponsored award.

Organized Research 

All research and development activities sponsored by federal or non-federal agencies and organizations.

Other Sponsored Activities

Sponsored awards, both federal and non-federal, for activities other than Instruction and Organized Research (e.g., work in galleries/collections, direct patient care).

Policy Sections

6002.1 Sponsored Award Proposals

Yale individuals and offices that submit sponsored award proposals must submit such proposals using the appropriate approved F&A Rate for the proposed activity, as detailed in the sections below.  The F&A Rate in effect at the time of budget submission must be appropriately applied to the direct cost budget.

6002.2 Federally Approved Facilities and Administrative Rates

Yale negotiates federally approved F&A Rates, as detailed below, with the U.S. Department of Health and Human Services.  These federally approved F&A Rates must be used for sponsored proposals with the federal government, as well as for pass-through agreements for which the federal government is the prime sponsor, unless otherwise restricted or awarded/negotiated. 

Under no circumstances can a higher F&A Rate at the time of budget/proposal submission be applied to a new award if the negotiated rate(s) is lower.

Yale negotiates F&A Rates with the federal government for the following categories (as defined in Definitions, above):

a. Organized Research (on/off campus)

b. Instruction (on/off campus)

c. Other Sponsored Activities (on/off campus)

d. DoD Contracts

Applicable federally approved F&A Rates are published in the current Yale University Rate Agreement (including the site-specific F&A Rates applicable to the West Haven Veterans Administration Medical Center and the Connecticut Mental Health Center).

The off-campus rate, rather than the on-campus rate, for each category above must be used for the duration of the award when one or more of the scenarios below are true:

  • the University does not own, lease, or rent the existing space being utilized under the award (this includes space that is donated the University);
  • rental/lease costs for the space being utilized under the award are budgeted within the proposal, approved by the sponsoring agency, and subsequently charged; or
  • 51% or more of the budgeted personnel costs under the award, excluding budgeted outgoing subawards, are for individuals working in space that the University does not own, lease, or rent, and for whom no University space is provided for the activity. Remote working arrangements only qualify for the use of the off-campus rate if no University space is provided for the activity.  Note: A determination of percentage must be made when activity under an award occurs both at facilities owned, leased, or rented by the University and at non-Yale facilities.

Subrecipient and supplier/vendor activities are excluded from the on/off campus rate determination.  Only the portion of work to be conducted by Yale personnel is considered.

6002.3 Federally Sponsored Training Awards and Other Programs

A federal agency may limit the reimbursement of F&A Costs when specifically identified in a sponsor’s program solicitation.  Examples of program solicitations that may restrict the reimbursement of F&A Costs include training awards, fellowships, and conference awards.  In general, proposals for these types of awards must apply the maximum F&A Rate permitted by the sponsoring agency for these activities, unless otherwise restricted or negotiated/awarded.

6002.4 State of Connecticut Awards

Awards sponsored by the State of Connecticut generally provide for F&A Rates between 0% and 25%, depending on the specific program/activity.  Yale generally allows acceptance of awards from the State of Connecticut with an F&A Rate of 15% or higher.  Acceptance of an F&A Rate below 15% requires prior approval, as described in Special Situations & Exceptions, below.

If the activities under an award from the State of Connecticut are to occur in leased space, leased space costs must be charged to the award as direct costs.  Exclusion of leased space costs as direct costs, where applicable, requires prior approval, as described in Special Situations & Exceptions, below.

6002.5 Corporate Funded Contracts, Excluding Clinical Trials

Corporate funded contracts, excluding clinical trials, must apply the current DoD Contract rate (i.e., the federally negotiated uncapped on-campus F&A Rate) (see Section 6002.2).  Except as detailed by the following points, utilization of an F&A Rate less than the current DoD Contract on-campus rate requires prior approval, as described in Special Situations & Exceptions, below:

  • for awards with annual direct costs under $10,000, the F&A Rate applied to the award must be at least 10%; and
  • for awards with annual direct costs between $10,000 and $25,000, the F&A Rate applied to the award must be at least 25%.

For an award from a small start-up company (i.e., a company that has been in business for less than 3 years from the start date of the award and has not yet completed, or has just completed, its initial public offering), the F&A Rate must be at least:

  • 25% in year 1 of award;
  • 40% in year 2 of award; and
  • the current DoD Contract rate in year 3 of the award and beyond (see Section 6002.2).

6002.6 Industry Funded Clinical Trials

Industry funded clinical trial agreements must apply the current clinical trial rate, which is published in the Clinical Trial FAQs.

6002.7 Non-Profit Sponsors

Yale will generally accept reduced F&A Rates when the sponsor is a non-profit organization and:

  • the sponsor has a written, publicly available policy that limits or prohibits F&A Rates or F&A Cost recovery; and
  • the requested amount is under $500,000 in total annual direct costs.

If a non-profit sponsor has a publicly published F&A Rate policy of less than 15% and the total annual direct costs on the award are equal to or greater than $500,000, recovery of the equivalent of a minimum F&A Rate of 15% is required.  The recovery of F&A Costs may be accomplished by:

  • direct charging of F&A type costs to the award (if permitted by the sponsor);
  • charging a departmental account;
  • charging a PI discretionary account, including endowments; or
  • a combination of these sources.

If a non-profit sponsor does not have a publicly published F&A Rate policy, recovery of the equivalent of a minimum F&A Rate of 15% is required, regardless of the amount of the award.  The recovery of F&A Costs may be accomplished by:

  • direct charging of F&A type costs to the award (if permitted by the sponsor);
  • charging a departmental account;
  • charging a PI discretionary account, including endowments; or
  • a combination of these sources.

In accordance with Policy 1405 Charging of Facilities and Administrative Type Expenses to Non-Federal Sponsored Projects, for sponsors that do not reimburse at the federally approved F&A Rates, Yale expects these sponsors to pay directly for costs that are normally F&A Costs if the terms and conditions do not specifically prohibit such costs and the costs benefit the award.

Note: For-profit entities may partner with non-profit foundations/organizations or establish non-profit foundations/organizations that are separate legal entities.  In the event a sponsor is such a foundation/organization and is designated as a 501(c)(3) entity, Yale will generally accept F&A Rates consistent with the provisions of this section.  

6002.8 Non-U.S. Governmental Agency Sponsors

Sponsor agreements from non-U.S. governmental agencies, including pass-through agreements, must apply the current DoD Contract rate (i.e., the federally negotiated uncapped F&A Rate) (see Section 6002.2).  Utilization of an F&A Rate below the current DoD Contract rate requires prior approval.

6002.9 Awards Transferred to Yale

When a sponsored award is transferred to Yale from another academic institution (e.g., when a faculty member transfers institutions), Yale will generally accept the F&A Rate previously accepted by the originating institution if the rate is lower than Yale’s applicable F&A Rate (as described in the sections above) until the end of the negotiated installment period.  At that point, the appropriate F&A Rates, as described in the sections above, must be applied.  If the rate of the originating institution is higher than Yale’s applicable F&A Rate, then Yale’s applicable F&A Rate must be applied.  For federally sponsored awards, Yale may not apply a rate higher than its negotiated F&A Rate.

Special Situations & Exceptions

Under exceptional circumstances, requests for waivers of F&A Cost recovery or the acceptance of a reduced F&A Rate can be made at the time a proposal is submitted.  Requests for exceptions require prior approval as follows:

  • For self-support schools, requests for exceptions require prior approval of the cognizant Dean (or designee); and
  • For all other schools, requests for exceptions require prior approval of the Vice Provost for Research (or designee).

Requests for exceptions should be submitted using Form 1306 FR.02 Facilities and Administrative (“F&A”) Rate Reduction/Waiver Request.

Roles & Responsibilities

Cognizant Dean (or designee)

  • Reviews and, as appropriate, approves requests for exceptions from the Yale self-support schools.

Departmental Business Office (or designee)

  • Uses appropriate F&A Rate when preparing a budget proposal to an external sponsor.
  • Ensures appropriate charging and recovery of F&A Costs, per approved F&A Rates, on sponsored awards under their purview.
  • As appropriate, requests applicable exceptions.

Principal Investigator

  • Identifies all costs related to the sponsored awards for which they apply.

Office of Sponsored Projects

  • Verifies use of approved F&A Rates in sponsored award budgets.
  • Verifies use of appropriate F&A Rates in proposals and, as applicable, approved exceptions.
  • Sets up accepted sponsored awards using approved F&A Rates.
  • Ensures that the current applicable rates are updated timely in Workday and IRES.
  • Communicates to the research community the applicable F&A Rate when a new rate (increase or decrease) is negotiated.

Vice Provost for Research (or designee)

  • Reviews and, as appropriate, approves requests for exceptions from the Yale schools other than the self-support schools.
  • Monitors for compliant application and negotiation of F&A Rates across the Institution.