Awards in which the University’s F&A costs were not waived (all or in part), have start dates on or after July 1, 2011, and were awarded with a provisional F&A rate will be subject to the new F&A rate agreement/rate increases. The Controller/EFA will automatically apply the appropriate rate for the effective period based on the new F&A agreement.
Example: An award was made to UC Berkeley with a start date of 7/1/11 for a period of three years. The approved budget included the provisional F&A rate of 53.5% across all three project years.
The Controller/EFA will now apply the appropriate predetermined F&A rate for each effective period according to the new rate agreement:
Year 1: 7/1/11-6/30/12 - 53.5% of MTDC (no change)
Year 2: 7/1/12-6/30/13 - 55.5% of MTDC (+2.0%)
Year 3: 7/1/13-6/30/14 - 56.5% of MTDC (+3.0%)
To cover the change/increase in F&A in Years 2 and 3, the Principal Investigator (PI)/Department has two options:
- The PI could request additional funds from the sponsor to cover the increase in F&A. The feasibility of this option, as always, depends on sponsor policy.
- The PI/Department could rebudget to make more funds available for F&A costs. This action may or may not require sponsor approval depending on sponsor policy.
1. National Science Foundation (NSF)
NSF awards that meet the criteria listed above made directly to UC Berkeley (or via a subagreement/MCA) will be charged F&A according to the new rate agreement. NSF policy is not to provide additional funding to cover any increase in F&A costs that result. Therefore, PIs/Departments will need to rebudget for the increase in F&A costs. This may be done without additional NSF approval as long as Research Terms and Conditions (RTC) apply to the NSF award. PIs/Departments should consult the NSF award document for this information. If RTC does not apply, the PIs/Department should contact the SPO Research Administrator (RA) assigned to their unit for guidance.
2. National Institutes of Health (NIH)
When SPO receives a Just-in-Time (JIT) request for a possible award from NIH, SPO will provide the new campus F&A rate agreement to NIH and attempt to get the appropriate new rates included as part of the new award.
For already established NIH awards that meet the criteria listed above made directly to UC Berkeley (or via a subagreement/MCA), NIH is not obligated to make any supplemental or other award for additional F&A costs just because a grantee’s rate agreement has changed. However, NIH will allow grantees to charge NIH projects at the newly negotiated rate in effect at the time direct cost expenditures are made during each project year covered under the new rate agreement.
Therefore, PIs/Departments will need to rebudget for any increase in F&A costs. This may be done without additional NIH approval as long as Research Terms and Conditions (RTC) apply to the NIH award. PIs/Departments should consult the NIH award document for this information. If RTC does not apply, the PIs/Department should contact the SPO RA assigned to their unit for guidance.
3. All Other Awards
PIs/Departments should consult the terms and conditions of individual awards that meet the criteria listed above to determine if the sponsor’s policies allow it to provide additional funds for changes in indirect cost rates. If allowed, the PIs/Department should contact the SPO RA assigned to their unit to make this request.
PIs/Departments that decide to rebudget to cover an increase in F&A costs should consult their award document to determine whether Research Terms and Conditions (RTC) apply. If RTC terms do not apply, PIs/Departments should consult with the SPO RA assigned to their unit to determine if sponsor approval for re-budgeting is required and work with the SPO RA to make this request. (Note: For NASA, substitute FDP Terms and Conditions for RTC in this paragraph.)
Impact on the Project’s Scope of Work
Typically small changes in F&A costs do not impact the scope of work of the project. Fluctuations in fringe benefit rates and other costs during the life of a project often occur and most project budgets can accommodate small changes in F&A rates as well. However, if a PI determines the scope of work will change as a result of changes in F&A rates (or any other reason), PIs/Departments should contact the SPO RA assigned to their unit to notify the sponsor.
Please contact SPO Director Pamela Miller if you have questions about this guidance.
For questions about the process for rebudgeting to accommodate the new predetermined F&A rates, please contact Extramural Funds Accounting.