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Facilities and Administrative Costs (F&A or Indirect Costs)

			Related Resources OMB Circular A-21 RAND Report: Paying for University Research Facilities and Administration AAMC Documents Proposed Revisions to OMB Cost Principles: Circulars A-21; A-87 and A-122 AAMC's Letter on the Presidential Review Directive AAMC Comments on NSTC Report on "Renewing the Federal Government-University Research Partnership for the 21st Century”

In Brief

Facilities and Administrative Costs (F&A), or indirect costs, are those institutional administrative and infrastructure costs that benefit and support research. These costs cannot be attributed directly to any one project, but they are never the less a real and necessary cost of research.

Regulatory Action

Tuition Remission and Voluntary Faculty Effort: OMB on January 5, 2001 issued a memorandum to all executive department heads making major changes to the interpretation of OMB Circular A-21 concerning the treatment of voluntary faculty effort and tuition remission.

NSTC Report on Implementation Actions: The National Science and Technology Council (NSTC) on January 10, 2001 issued a report detailing actions taken by Federal agencies and the Administration to implement the NSTC's 1999 recommendations. The NSTC report describes a variety of actions, both completed and underway, to strengthen the partnership.

Executive Order on Principles: President Clinton on December 29, 1999 announced the signing of an executive order providing guiding and operating principles to govern the federal-academic research partnership. The executive order mandates that government departments and agencies that support research at academic institutions regularly review their existing policies and procedures to ensure that they meet the spirit and intent of the principles.

Standard Proposal Format: The Office of Management and Budget (OMB) published a notice in the August 8, 2000, mandating a standard format for submitting facilities and administrative (F&A) rate proposals as required by OMB Circular A-21, “Cost Principles for Educational Institutions.” The standard format, which is included as Appendix C to the Circular, includes two parts: a summary schedule of the institution’s proposed F&A rates, along with the F&A cost pools and their allocations; and, a listing of supporting documentation to be submitted with the F&A proposal.

Animal Research Facilities: The DHHS Office of Grants and Acquisition Management issued on November 15, 1999 an "Action Transmittal Memorandum" changing the treatment of animal research facility costs. Under the new policy, portions of animal facility costs may now be included in an institution's F&A (or indirect cost) rate.

Administrative Review

In September 1996, a Presidential Review Directive (PRD) was issued in an effort to address the increasing tensions between research universities and the federal government. Much of this tension focused on repeated battles over F&A policy. OSTP led the National Science and Technology Council (NSTC) review along with six major federal research agencies or departments: NSF, NIH, NASA, and the Departments of Defense, Energy, and Agriculture. OMB also contributed to the review process. OSTP consulted widely with the university community in providing counsel to the NSTC. As part of that consultation effort, AAMC was asked its views on the status of the government-university partnership. In an August 15, 1997 response, the AAMC called for the development of a principles document to guide the federal-university research relationship. On May 28, 1999, President Clinton released the report from the NSTC on the PRD and on ways to strengthen the federal government-university research partnership.

Legislative Action

There have been no recent legislative activities related to Facilities and Administrative costs.

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