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Indirect Costs (F&A) Policy

The University of Houston’s policy is to apply the University's negotiated indirect (Facilities & Administrative, or F&A) cost rate to all externally-sponsored projects. The University of Houston sets indirect (F&A) cost rates with the federal government based on formulas and negotiation processes set forth in the Uniform Guidance.

An explanation of rate and the current UH negotiated FA rates can be found here.

Roles and Responsibilities

The fiscal management of sponsored projects, including the application of appropriate indirect (F&A) cost rates in proposed project budgets and management of awarded projects within budget and funding limitations, is the responsibility of the Principal Investigator. The PI is not authorized to negotiate a reduction or waiver of indirect (F&A) costs with the sponsor on any sponsored project. The Principal Investigator shall work with their Research Administrator to submit fully loaded budgets that include both the direct and indirect (F&A) cost of performing research at the University of Houston.

Reductions and Waivers

Indirect Cost (IDC) also known as Facilities & Administrative or F&A rates are not generally waived nor reduced at the University of Houston (UH). However, there are exceptions where an IDC reduction or waiver are considered, provided it meets one of the pre-approved exceptions below.

Pre-Approved Exceptions

The following exceptions do not require additional documentation to accept IDC reduction: 

  1. Salary Reimbursement Agreements - Payments to students between partnering institutions that allow a student or post-doctoral fellow from one university to work at another university will not be assessed IDC, provided that the award instrument used is a Salary Reimbursement Agreement (SRA) and not a sub-award agreement. When a sub-award agreement, in which the prime agency's terms and conditions are passed down to UH, is used for student's salary reimbursement, the other university must honor the UH IDC rate or offer the rate given to them by their sponsor.

  2. Required by Sponsor - IDC reductions or waivers required by the sponsor as a condition of obtaining an award (mandatory cost sharing) will be approved without additional justification or exception. The cost-sharing commitment must be included in the proposal to be considered by the sponsor. 
  1. Non-Profit Institutions - The University of Houston recognizes that many non-profit institutions have their own policies regarding the use of their funds for overhead expenses. In the case where the non-profit has an official written and publicly disclosed policy in this regard that is applied on a consistent basis, or where a public solicitation for proposals defines a limit on indirect (F&A) cost recovery as a condition of the program, the University of Houston will normally accept these requirements. If it is not a public policy available on the web, a project specific waiver will need to be requested.

  2. Consortia - Consortiums (SPCs), commonly known as Industrial Affiliates Programs, have received a reduced IDC (F&A) rate of 20% applied to their sponsored projects. This exception will continue.

Note: In cases where the University of Houston’s agreement to accept a lower indirect (F&A) rate is based on our understanding of the sponsor’s policy, and where the University of Houston becomes aware of a higher indirect (F&A) cost rate paid by that sponsor to another recipient, the university reserves the right to apply the higher rate to that sponsor’s University of Houston projects.