15.1 Facilities & Administrative (Indirect Cost) and Fringe Benefits Rates
Facilities & Administrative (F&A) Rates (also known as indirect cost rates) and fringe benefits rates are established in accordance with the federal government's Office of Management and Budget (OMB) Circular A-21, Cost Principles for Higher Education. These rates are negotiated between Stanford and the Office of Naval Research (ONR), the cognizant federal agency overseeing the administration of sponsored agreements at Stanford.
All proposals to sponsors must include budget requests for F&A costs and fringe benefits, using the rates negotiated by Stanford and provided by Cost and Management Analysis (CMA), unless a reduced rate is approved by the Vice Provost and Dean of Research (or for the Medical School, by the Dean of the School of Medicine or designee) on a case-by-case basis. The Office of the Dean of Research maintains a separate list of entities whose published policies specify rates lower than Stanford's, where the lower rate has been approved by the University.
Proposals to these sponsors may be submitted to the Office of Sponsored Research (OSR) using the rates indicated on that list without prior approval by the Vice Provost and Dean of Research (or Dean of the School of Medicine). See RPH: Indirect Cost Waivers.
2. Application of On- and Off-Campus Facilities & Administrative Rates
F&A (indirect cost) and fringe benefit rates are applicable to all externally-sponsored projects (grants, contracts, cooperative agreements, subgrants, and subcontracts) funded by federal, state or private sponsors. The application of these rates allows Stanford University to recover certain costs (e.g. facilities, utilities, libraries, administration, student services, etc.) associated with externally-funded training and research activity.
A. Definition of "Off Campus"
A project, or part of a project, is considered to be performed off-campus if the activity is conducted at a location other than Stanford University's academic lands and the majority of F&A (indirect costs), e.g., operation and maintenance, depreciation or lease of buildings, equipment and improvements, associated with the University's facilities, both owned and leased, is not applicable. If a project is located in leased space and the lease is a direct charge to the project, then the project is considered off-campus; if the project is not charged directly for the lease cost and the lease is a part of the University's F&A (indirect cost) rate, then the project is considered on-campus. In other words, the classification of on- or off-campus is solely for the purpose of applying the correct F&A (indirect cost) rate.
B. Projects Conducted Partially Off-Campus
The on- or off-campus determination shall be based on the Stanford portion of project costs and not include costs of a collaborating entity. "Project" refers to the grant or contract award to Stanford University, not including collaborating entities.
Grant or Contract Award (Annual Level) Under $100,000 in Modified Total Direct Costs
Projects of this size which are partially performed off-campus are not apportioned between their on-campus and off-campus components for F&A rate purposes. If 50% or more of the project's MTDCs is to be expended on campus, the entire project is charged the on-campus F&A rate. If more than 50% of the MTDC is determined to be off campus, the entire project is charged the off-campus F&A rate.
Grant or Contract Award (Annual Level) of $100,000 or More in Modified Total Direct Costs
MTDC for projects of this size which are partially performed off-campus is apportioned between on-campus and off-campus components for F&A rate application purposes in instances where the lesser component is 20% or more of the MTDC of the project. If the lesser component is under 20%, the entire project is charged the F&A rate of the larger component, i.e. if the on-campus MTDC component is larger, the entire project is charged the on-campus F&A rate.
3. Modified Total Direct Costs (MTDC)
MTDC is the base to which F&A (indirect cost) rates are applied. OMB Circular A-21 defines this base as follows:
Modified Total Direct Costs consist of,
"salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care, tuition remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs."
As specified in this definition, some costs are excluded from Total Direct Costs (TDC) to arrive at the MTDC base to which F&A (indirect cost) rates are applied. OMB A-21 also provides for exclusions of other items of cost where necessary to avoid a serious inequity in the distribution of costs. Any questions on determination of the MTDC base should be directed to the Cost and Management Analysis Office (CMA).
A. Application of Facilities & Administrative Rates Using Modified Total Direct Costs or Total Direct Costs
For Federally-sponsored Projects
The MTDC base shall be used when a Federal sponsor's published F&A rate is less than the current full ONR-negotiated rate, but does not specify a base. The TDC base shall be used when a Federal sponsor prescribes use of the TDC base.
For Non-Federally-sponsored Projects
The TDC base shall be used when a non-Federal sponsor's published F&A rate is less than the current full ONR-negotiated rate.
F&A waiver requirements are contained in RPH: Facility and Administrative (Indirect Cost ) Waivers apply in all cases. Refer to the waiver list maintained by the Office of the Vice Provost and Dean of Research.
4. Fringe Benefit Rates
The fringe benefits rates are applied to the appropriate "salary and wage bases." As defined in Stanford's Negotiation Agreement, this base includes direct salaries and wages being charged to the project, including vacation, holidays, and sick leave. Salaries for graduate students with assistantship appointments are charged a Graduate Assistantship Rate which provides a health insurance subsidy. Salaries for temporary employees and those working less than half-time are charged the Contingent (casual/temporary) Employee Benefits Rate. Postdoctoral Scholars are charged the Postdoctoral Scholars Rate. All other employees are charged the Regular Employee Benefits Rate.