Requesting Facilities and Administrative (Indirect) Cost Reductions

Obtaining an F&A cost reduction:
A facilities & administrative (F&A) cost reduction is an institutional agreement that the University will charge F&A costs at a lower rate than the rate published by the Vice President for Research. Principal investigators can obtain these reductions on a case-by-case basis.

When to obtain a reduction:

Review the Facilities & Administrative (Indirect) Cost Rates table.

A reduction does not have to be obtained if:

• The rates listed in the "Other Sponsor-Established Rates" or "University of Minnesota-Approved Waivers" can be applied to the project.
• The Request for Proposal, Request for Application, or proposal instructions mandate that a particular rate or base be charged. Reference the RFP or RFA on the PRF. In instances when proposal instructions consist of a letter from the sponsor, the letter must be issued by a fiscal officer.

All other projects should use the rates and bases listed in the table entitled "Facilities & Administrative Cost Rates." However, a reduction will be considered when the unique circumstances of a particular project dictate that F&A costs should not be charged at the published rate or base for that type of project. Reasons why a reduction might be granted include:

• the grant is small and capped
• the proposal is for a student stipend only
• the project has been transferred from another institution that has a lower negotiated F&A rate
• the proposal is for seed funds or a pilot project that may lead to future funding and greater F&A recovery

A request is subject to collegiate and institutional approval, which is not guaranteed and depends on the unique circumstances of the request.

1. Use the F&A Reduction Request Form to make a request. The principal investigator should make the request 30 days in advance of the proposal's submission to the sponsor in order to provide time for careful review of the request.

2. Forward for evaluation within the college. The form must have a signature indicating approval from the department head. This approval implies that the unit receiving the sponsored funds has sufficient funds to cover its share of the local F&A costs related to the project.

3. The college will review and, if appropriate, approve the request and forward it to the Associate Vice President for Research at Sponsored Projects Administration for evaluation and institutional approval.

4. A response will be sent to the principal investigator with copies to the department head, dean, and grant administrator in Sponsored Projects Administration.

If a reduction has not been obtained for a proposal that is submitted to Sponsored Projects Administration for processing:

The grant administrator will contact the principal investigator to determine whether a reduction is in process. If a reduction request is in process, the grant administrator will facilitate a decision. If the Associate Vice President for Research or other appropriate officials are unavailable, the particular circumstances surrounding each proposal dictate how the grant administrator handles the proposal.

At the end of the project:

For fixed-price awards, the Associate Vice President for Research, Sponsored Projects Administration, will grant a reduction with an understanding that if there is a balance at the end of the project, the reduction will be rescinded. The published rate will be charged to the entire project and the value of the reduction will be subtracted from the remaining balance. For example, if a balance of $5000 remains at project end and the principal investigator was granted a reduction valued at $1500, $3500 would be available for transfer to departmental account. However, if the balance was $500, no funds would be available for transfer to the departmental account and the effective reduction would then be $1000.