Negotiated Indirect Rates
Rates at a Glance
The rates below are from the December 17, 2019 Federal Rate Agreement. If you have questions regarding the use of this rate agreement, please contact the Division of Research – Office of Contracts and Grants.
Negotiated Rates
| Period | Federal | Non-Federal |
| 9/1/2017 - 8/31/2020 | 53.00% (predetermined) | 53.00% (predetermined) |
| 9/1/2020 - 8/31/2023 | 55.00% (predetermined) | 55.00% (predetermined) |
Facilities & Administration Costs (formerly known as Indirect Costs)
The base for F&A Costs is the Modified Total Direct Costs (MTDC).
On-Campus Rates
| Period | On-Campus Research | On-Campus Other Sponsored Activities |
| 9/1/2019 - 8/31/2020 | 53.00% | 33.00% |
| 9/1/2020 - 8/31/2023 | 55.00% | 33.00% |
Off-Campus Rates
| Period | Off-Campus Research | Off-Campus Other Sponsored Activities |
| 9/1/2019 - 8/31/2023 | 26.00% | 26.00% |
*Clinical Trial Rates
| Period | On-Campus Research |
| 2/1/2019 - 6/30/2021 | 31.00% |
Modified total direct costs, consisting of 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). Modified total direct costs shall exclude 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.
*Clinical trial rate is applied to the Total Direct Cost; no budgeted item is excluded from the application of indirect costs. This rate applies regardless of whether a Clinical Trial is based on a sponsor-initiated, or an investigator-Initiated protocol.
Applying IDC on Proposal & Award at the Rates Established in the Negotiated Rate Agreement
According to 2 CFR 220, Appendix A, Section G.7.a. and 2 CFR Part 200, Appendix III, Section C.7, when identifying and computing indirect costs at Institutions of Higher Education, Federal agencies must use the negotiated rates in effect at the time of the initial award throughout the life of the award.
Definitions
- Date of rate agreement - The date on the letter from the university’s cognizant agency, the US Department of Health and Human Services Division of Cost Allocation (HHA DCA), approving its indirect cost for the given periods.
- Award issue date - The date the agency released the award to the university. The date can be on, before, or after the award performance-period begins.
- Performance period begin date – The official start date of the award stated in the sponsor’s notice-of-award.
- Provisional Rate - A provisional rate is a temporary rate, stated in the F&A Rate Agreement, established for a given period of time to permit funding, claiming and reporting of indirect costs pending establishment of a predetermined rate for that period. The provisional rate is applied when the award period of performance extends beyond the expiration date of the last predetermine rate in the F&A Rate Agreement. It can be used for budgeting and charging expenditures pending the approval of the new predetermined rate.
- Predetermine or fixed rate – The approved indirect cost rate applicable to a specific current or future period that must be charged to expenses during the period of performance regardless of the rate at the time of the budget.
For proposal budgets: The predetermined or fixed rate in effect at the beginning of each budget period should be used. If no predetermined rate is in effect for a proposal period, the provisional rate can be used. However, suppose the final approved rate is different from the provisional rate used in the proposal. In that case, the new final approved rate will be applied to the award and, if necessary, retroactive to its effective date.
For award expenditures: The university will apply the predetermined or fixed rate (there may be more than one) in effect at the time of the initial award throughout the life of the award.
For example, on December 17, 2019, the following rates on Modified Total Direct (MTDC) cost were approved by the university’s cognizant agency.
- Fixed-Rate - 53% effective 09/01/2019 – 08/31/2020
- Fixed-Rate - 55% effective 09/01/2020 – 08/31/2023
- Provisional Rate - 09/01/2023 - Until Amended
Awards with a performance period beginning on or after 09/01/2019 will have two rates, and awards with a performance period beginning on or after 09/01/2020 will have one rate throughout the life of the grant, as shown in the tables below.
Example: An award with a performance period of 04/01/2020 – 03/31/2025 (five years) will have the following rates applied:
|
Start Date |
End Date |
Rates Applied |
|
04/01/2020 |
08/31/2020 |
53% |
|
09/01/2020 |
03/31/2021 |
55% |
|
04/01/2021 |
03/31/2022 |
55% |
|
04/01/2022 |
03/31/2023 |
55% |
|
04/01/2023 |
03/31/2024 |
55% |
|
04/01/2024 |
03/31/2025 |
55% |
FAQ about Budgeting and Charging IDC Rates
The Facilities and Administrative (F&A) rate is negotiated between the University of Houston (UH) and the Department of Health and Human Services (DHHS) Cost Allocation Services. Prior to the negotiation, UH submitted a required proposal documenting the actual costs incurred during a base year for items such as space, utilities, general-purpose equipment, administrative salaries, and benefits, etc. When costs in these categories significantly increase or decrease, rates changes.
Yes, per UH policy, the new rates apply to all externally-sponsored projects.
You should use the rate(s) found in the most current negotiated rate agreement.
You should use the provisional rate pending the new rate agreement. Then at the Just-In-Time or award negotiation period, submit the new rate agreement and a revised budget to the sponsor. Additional funds for increased IDC may be approved in an amount that does not exceed limitations in the proposal solicitation. Generally, once the award is issued, federal sponsors will not award additional IDC beyond those calculated in the approved budget.
For federal awards under the Uniform Guidance, the rate that will be applied to expenditures on the award is the rate(s) in effect at the time of the initial award, not the rate previously submitted in the proposal, if it is different.
This is a fairly unusual situation, but we will accept the amendment to the award that increased the award F&A rates and the overall budget. In this way, the IDC rate(s) applied to the actual award expense, based on the approved negotiated rate agreement, will have less of an impact on the direct cost of the award.
Budgets are estimates based on anticipated or actual spending. When the actual amount charged for IDC is more, due to a rate change as outlined in the approved negotiated rate agreement, federal sponsors generally will not award additional IDC beyond those calculated in the approved budget.
Competing renewal applications should use the appropriate IDC rate specified in the most current rate agreement, regardless of the previous segment rates.
For federal awards under the Uniform Guidance, the rate(s) that will be applied to expenditures on the existing award is the rate(s) in effect at the time of the initial award and will remain the same throughout the life of the award. The rate(s) will not change to align with the newly negotiated rate agreement.
The University award number and the fund/project number will not change.
When the supplement is new uncommtted supplemental funding, the F&A rate used can be the current rate in effect unless the sponsor requires the use of the F&A rate approved at the time of the initial award. The National Science Foundation requires the university to use the rate in effect at the time of the initial award for supplemental funding.
The University award number will remain the same, but supplement funds will be set up in a separate project cost center under the award with the agreed-upon IDC rates applied.