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

Project budgets should include all costs required to accomplish the objectives in the proposal or agreement. These costs are categorized as either direct or indirect costs:

  • Direct Costs (e.g. salary, fringe benefits, and materials and supplies) can be identified specifically with a particular final cost objective or can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs (200.413).
  • Indirect (Facilities and Administrative – F&A) Costs means those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted. These costs include building depreciation, equipment and capital improvement, utilities, custodial services, general administration, research administration, the libraries, accounting, and purchasing. (200.414).

The University’s F&A rates are determined by an agreement with the federal government in accordance with the federal Uniform Guidance. In May 2021, the University negotiated its current Cost Rate Agreement.

On-Campus Off-Campus
Organized Research

Organized Research means all research and development activities that are separately budgeted and accounted for, including sponsored and university research activities and research training activities.

This rate is used when the project will take place off campus for at least 90 consecutive days and one of the following criteria is met:

  • The combined proposed effort of all involved UT personnel working off-campus is greater than the combined proposed effort of all involved UT personnel working on-campus. This includes unpaid contributed effort.
  • The budget includes leasing or renting an off-site facility as a direct cost, and the personnel paid from the grant and any equipment are located at that facility.
  • The total direct costs incurred off-campus exceeds the total direct costs incurred on-campus.

You must have OSP approval prior to using the off-campus rate. Requests to use the off-campus rate are due to OSP at least seven (7) business days before the proposal deadline.

58.5% (MTDC)
(14.5% ARL)





Instruction means the institution’s teaching and training activities (other than research training) whether offered for credit toward a degree or certificate or on a non-credit basis, and whether offered through regular academic departments or separate divisions, such as a summer school division or an extension division.


50% (MTDC)

26% (MTDC)



Other Sponsored Activities

Other Sponsored Activities means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects and community service programs, as well as symposia and conferences that do not meet the definition of Instruction.




40% (MTDC)




Exceptions Under F&A Procedures

The University of Texas at Austin will honor published (e.g. foundations or non-profits) or statutory (e.g. USDA, US Dept. of Education) limitations on recovery of indirect costs. The University also accepts the following rates without additional documentation:

Prime Sponsor Activity Type Rate (on TDC Base)

Texas, Austin, and Travis County funding (excludes Federal flow through)


15% (TDC)

Non-Profit foundations without published rates


15% (TDC)

Industry (excludes Federal flow through)

Clinical Trial

38% (TDC)

All other exceptions to these F&A rates require a waiver, which is approved by the Vice President for Research.

See F&A Waiver and Reduction Requests.

F&A Rates for Subawards

Subrecipients to the University of Texas at Austin should use the federally negotiated F&A agreements in effect at their institutions unless a published or statutory limitation from the prime sponsor applies. When no approved cost rate agreement exists and there is no sponsor-published policy, the University will accept the following F&A rates:

Prime Sponsor Subaward Entity Rate

National Institutes of Health (NIH)

Foreign Institutions or International Organizations (GPS 16.6; 45 CFR 75.414(c)(1)(i))

8% (MTDC)

National Institutes of Health (NIH)

For-profit entities without an established cost rate agreement (excludes SBIR/STTR) (GPS 7.4; 45 CFR 75.414(c)(1)(ii))


*For-profit entities with a negotiated rate agreement should use their negotiated rates.

Not Allowed

Any Federal

Non-Federal entity (never having received a negotiated indirect cost rate)(2 CFR 200.414(f))

10% (MTDC)
de minimis

F&A Bases (TDC/MTDC)

Base: The F&A rate is applied to a base of direct costs in order to determine the F&A Cost. The base can be calculated in one of the following ways:

  • Total Direct Costs (TDC) = TDC means all direct costs included in the project budget. There are no exclusion or modifiers.
  • Modified Total Direct Costs (MTDC) = MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs (§200.68).

F&A Rate Decision Guide

Is it Research?

Organized Research means all research and development activities of an institution that are separately budgeted and accounted for. It includes:

  • Sponsored research means all research and development activities that are sponsored by Federal and non-Federal agencies and organizations. This term includes activities involving the training of individuals in research techniques (research training).
  • University research means all research and development activities that are separately budgeted and accounted for by the institution under an internal application of institutional funds. (2 CFR 200 Appendix III Section A.1.b.).

An Organized Research rate (56.5%) may be appropriate if you can answer yes to any of the following:

  • Is there a systematic investigation or are there activities including testing and evaluation?
  • Will there be a scholarly inquiry, analysis, or critical study, testing, hypothesis, or data collection?
  • Will the findings be used to contribute to generalizable knowledge (i.e. meant to have an impact on others within the discipline) inside or outside the Institution?
  • Will the results or outcomes be published, archived, presented or viewed in some way as relevant beyond the specific participant population?

Is it Instruction?

Instruction means all teaching and training activities (except for research training), whether they are offered for credits or through regular academic departments or separate divisions. Also considered part of Instruction is departmental research:

  • Sponsored instruction and training means specific instructional or training activity established by grant, contract, or cooperative agreement. For purposes of the cost principles, this activity may be considered a major function even though an institution’s accounting treatment may include it in the instruction function.
  • Departmental research means research, development and scholarly activities that are not organized research and, consequently, are not separately budgeted and accounted for. (2 CFR 200 Appendix III Section A.1.a.).

An Instruction rate (50%) may be appropriate if you can answer yes to any of the following:

  • Will the activity support curriculum development?
  • Will the activity support teaching/training activities (other than research training)?
  • Is the intended audience students enrolled at the University?

Is it Other Sponsored Activities?

Other Sponsored Activities means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects, community service programs, conferences, travel grants, public events, library collections, archival digitizing or cataloguing. (2 CFR 200 Appendix III Section A.1.c.).

An Other Sponsored Activities rate (40%) may be appropriate if you can answer yes to any of the following:

  • Is the intended audience the public?
  • Is the intended activity a conference whose participants are not students enrolled at the University?
  • Is the intended activity travel to a conference (excludes travel related to research)?

F&A Rate FAQs

How is the F&A rate calculated?

The F&A rateis the result of dividing the University’s indirect cost pools (or overheard) by the direct costs and cost share of all the sponsored research and other activities. The University’s overhead includes: depreciation on buildings, equipment and capital improvement, operations and maintenance expenses, the libraries, general, departmental, student, and sponsored administration. Methods for this calculation are outlined in Appendix III to Part 200 of Uniform Guidance – Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (2 CFR 200 Appendix III).

When do the University’s F&A rates change?

The rates in an F&A rate agreement are typically effective for a two to four year period, and may be extended for an additional two year provisional period afterward. The University currently has four federally negotiated rates: Organized Research, Other Sponsored Activities, Instruction, and Off Campus. The Off Campus rate is statutorily limited to 26% and is unlikely to change in the foreseeable future. The Instruction rate has remained stable since it was first established in 2003. The Organized Research and Other Sponsored Activities rates have historically changed every two to four years.

What causes the F&A rates to increase?

There are several drivers of these costs. The cost of space (building construction and maintenance) has risen rapidly during the Austin-area housing and construction boom. If the research community can use laboratory and research office space more efficiently, we can limit such increases in the future. The cost of administration has increased as more regulatory burdens are imposed. UT and other research universities work hard to try to make sure that regulations are appropriately scoped to the concerns they hope to address.

Does a 58.5% overhead mean more than half of my grant goes to indirect costs?

No. F&A is charged as a surcharge on select direct costs, not a fraction of the total grant. In short, the portion that goes to overhead is much lower than this rate implies. For example, when the F&A rate was 54.5% (for the three-year period beginning in 2013) the average fraction of an NSF grant that went to overhead was 22.4%.

Who pays for F&A expenses?

The university covers all indirect costs related to research from its own accounts. As you spend direct funds from your grant, UT bills the granting agency for those direct expenses and receives a reimbursement for the allocated indirect expenditures at the agreed rate.

How are F&A reimbursements spent?

At the end of each calendar year, the Office of Sponsored Projects (OSP) calculates the total F&A reimbursements the sponsors have provided against the direct-cost expenditures on each grant. Generally, 75% of the reimbursement is allocated to the institution to cover university-wide research F&A expenses for the next year. 25% of the total is distributed to your college/school dean to cover the support and facilities that the college/school provides for research. The dean decides how to apportion these funds among departments and other units.

Can subaward entities include contract fees in their budgets as well as indirect (F&A) costs?

No. Subrecipients and subcontractors, including those from for-profit organizations, may not charge a fee as well as indirect (F&A) costs. However, a fee may be paid to a contractor providing routine goods or services under a grant in accordance with normal commercial practice.

Since I'm working remotely during the COVID-19 crisis, using my home wifi, phone and other resources, can the off-campus IDC rate be applied to my research grants?

No. The same IDC rate that was approved at the time your grant or contract was awarded will continue to be applied, even if you and your research staff/trainees are working 100% remotely. The reason the on-campus rate will still be applied is that the research operating costs incurred by your sponsored research activity continue to be incurred even when you are off campus – costs including building leases for your office and research space; permanent infrastructure depreciation; and salaries, health insurance and other benefits for your research administration staff, department finance support, and all the other UT employees who help you execute and administer your research without being directly billed to your grant/contract.

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