Recovery of Sponsored Program Costs

The University's Policy on Recovery of Sponsored Program Costs (the Policy) was last revised in April 1994. This memo re-affirms the basic principles and procedures of that Policy and proposes revisions which should make implementation of the policy easier for Principal Investigators. Three elements of the Policy are discussed: a.) waivers of facilities and administrative (F&A, formerly "indirect") costs, b.) when the federal rate and base should be applied; and, c.) correct use of the off-campus F&A rate.

As stated in the Policy, the total cost of performing each sponsored program - direct costs plus F&A costs - is to be paid for by the sponsor. This is as it should be since F&A costs are real costs incurred by the University in support of sponsored programs. At our federally approved rate, we recover only 74% of our federally approved expenses included in calculating University support of sponsored programs. Each waiver of indirect costs further reduces resources from revenue available to support sponsored programs. Therefore, commitment of any University resources, including waivers of indirect costs will be approved only in exceptional circumstances. Procedures for requesting a waiver of F&Amp;A costs are found in the revised Policy which is attached.

The use of one F&A rate and base for Federal sponsors and a different rate and base for non-federal sponsors has been confusing for both sponsors and Principal Investigators. Under the revised Policy (Section 1), the federal rate and base is used to budget and charge F&A costs for all sponsored programs except when: a.) the sponsor's policies stipulate a different rate and/or base, b.) the sponsor is an agency of the State of New York, or c.) the program is a clinical trial. In these cases, the F&A costs will be budgeted and charged using a.) the rate and base stipulated by the sponsor, b.) the State Agency F&A rate and the Federal MTDC base, and c.) the Clinical Trial rate and Total Direct Cost (TDC) base.

For projects conducted partially on- and partially off-campus, the revised Policy more clearly defines how to apply the off-campus rate to the portion of direct costs expended at an off-campus site.

*F&A base is TDC

December 12, 2001

University at Buffalo

Policy on Recovery of Sponsored Program Costs

The total cost of a sponsored program, like the cost of any other University program, is the sum of two categories of costs: direct costs plus facilities and administration (formerly indirect) costs. Both categories of cost are real; they differ only in the degree to which they can be assigned easily and accurately to specific programs. Program personnel costs and equipment acquisition costs are examples of direct costs. Facilities and administrative (or F&A) costs are those which cannot be assigned easily and accurately to specific programs as they are incurred in providing essential support and management services simultaneously to many or all. Costs incurred in providing purchasing services and human subjects review are examples of F&A costs. Since the University incurs F&A costs which are both real and substantial as a consequence of accepting and conducting sponsored programs, it is appropriate that these costs be borne by the programs' sponsors.

It is the policy of the University at Buffalo to recover from external sponsors the total direct and F&A costs of each sponsored program. In certain unusual circumstances, it may be in the University's interest to share a portion of sponsored program costs through a commitment of University resources. In each such case, commitment of University resources, whether in the form of direct or F&A costs, must have University approval prior to the submission of a proposal by the University to an external sponsor, or in the absence of a formal proposal, prior to the acceptance of an award by the University.

Procedure

1. A budget which provides for the recovery of total costs must be prepared for each sponsored program administered directly by the Research Foundation, and each sponsored program administered by UB Foundation Services, Inc., on behalf of the Research Foundation. The total cost budget must include full F&A costs calculated by multiplying the appropriate F&A cost base by the appropriate F&A cost rate. Current F&A cost rates for various program and sponsor types can be found at the Sponsored Programs Administration website (www.research.buffalo.edu/spa/indirect.htm). Assistance with calculating F&A costs may be obtained from Sponsored Programs Administration, Suite 211, UB Commons, 520 Lee Entrance, Amherst. NY 14228-2567, (716) 645-2977. In all but unusual and well-justified circumstances, the total cost budget, including full F&A costs, will be the budget proposed to the external sponsor.

2. If the sponsored program costs contributed by the University are all direct costs, the University's contribution to the program need only be approved by the Dean(s) and/or Department Chairperson(s) responsible for administering the University resources which are to be committed to the program. Such approvals, for the University's contribution to the program, are indicated by signature on the Sponsored Programs Approval Form which specifies the proposed University commitment in item 21 and/or 22.

3. If the University's contribution to the program is to include F&A costs, the Principal Investigator must submit a written request for waiver of those costs. The request for waiver, endorsed by the cognizant Dean(s) and Department Chairperson(s), should be addressed to the Assistant Vice President for Sponsored Programs Administration using the form "Request for F&A Cost Waiver," which is available at the Sponsored Programs Administration website (www.research.buffalo.edu/spa/formslist.htm#univforms). The instructions attached to the form should be consulted before completing the form. The request must explicitly identify the institutional interest(s) which will be served by conducting the proposed program without fully recovering the F&A costs associated with the program. The request for waiver should also respond to the following questions:

   1. Has a limit been imposed by the sponsor on funds to be made available in support of the program?

   2. Has the sponsor required either a scope of work or level of effort which will result in total costs in excess of the support which the sponsor will provide?

   3. Are the campus entities which would conduct the program contributing to the proposed University contribution?

   4. Will extra service compensation be paid to the Principal Investigator or other member of the project staff?

   5. Will salary budgeted for the Principal Investigator be paid into an IFR account?

   6. If the sponsor is a company, is it located within New York State?

   7. If the sponsor is a company, is it a qualified Small Business (less than 500 employees)?

   Only under exceptional circumstances, when the potential benefits are compelling and well-justified, will a request for waiver be approved if the unit(s) requesting the waiver do not contribute to the proposed University cost sharing.

4. Requests for F&A costs waivers must be reviewed and approved by the Vice President for Research.

5. Some not-for-profit sponsors, such as private foundations and government agencies, publish and consistently apply policies that limit F&A costs to an amount less than full recovery of the University's costs. In these cases, when sponsor policy can be confirmed, a waiver is not required for submission of proposals or acceptance of awards at the sponsor's F&A cost limit. A waiver will be required if the F&A costs to be charged are below the sponsor's limit. Whenever a sponsor limits F&A costs but allows some costs normally charged as F&A to be charged as direct (e.g. administrative or accounting costs), then allowable costs are to be included in the direct cost budget.

6. Clinical trials sponsored by private sector sponsors will be charged a flat fixed Clinical Trial F&A rate regardless of campus location. Proposals and awards for clinical trials which include F&A cost rates less than the established Clinical Trial rate will require a waiver of F&A costs. In such cases, the procedure under item four (4) above should be followed.

7. The on-campus F&A rate is to be use for projects conducted entirely on-campus and the off-campus rate for projects conducted entirely off-campus with the exception of clinical trials. When a project is conducted partly on- and partly off- campus, the on-campus rate is applied to the on-campus portion and the off- campus rate to the off-campus portion. For this purpose, a project is partly off- campus if the project uses an off-campus site for a period of at least 90 consecutive days and, during that period, at least 20% of project salaries and wages will be expended at the off-campus site. The off-campus portion is determined by dividing the salaries and wages paid for off-campus performance by total salaries and wages.