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UC DAVIS: Office of Research and Office of Administration August 11, 2004 DEANS, DIRECTORS, DEPARTMENT CHAIRS AND CAMPUS ADMINISTRATIVE OFFICERS RE: New Facilities and Administrative (F&A) Cost Rate Agreement UC Davis recently completed negotiations with the U.S. Department of Health and Human Services (DHHS), Division of Cost Allocation, regarding a new F&A rate agreement. As you may know, the F&A rate is the mechanism the campus uses to recover its indirect costs of conducting research, instruction, or other activities that are sponsored by federal agencies. The new rate agreement is effective June 30, 2004 and covers the period July 1, 2003 through June 30, 2008. Please refer to http://accounting.ucdavis.edu/EX/UCD_F&A_Rate_06_30_04.pdf for details of the new UC Davis F&A rate agreement. As you may recall from previous communications, UC Davis is able to justify an F&A rate for organized research of approximately 58% using rules established in OMB Circular A-21. However, our new rate agreement calls for our organized research rate to stay at its current level of 48.5 percent through fiscal year 2004-05, then increase to 52.0 percent by fiscal year 2007-08, an increase of 3.5 percent points over four years. Under the rules established in OMB Circular A-21, federal agencies should fund F&A recovery at levels consistent with our new rate agreement beginning June 30, 2004. Further, in order to be consistent with federal regulations, the University will apply the new organized research rate to awards made between July 1, 2003, and June 30, 2004. This may result in some rebudgeting on continuing grants for fiscal years 2005-06, 2006-07, and 2007-08. Awards made before June 30, 2003, will continue at 48.5% for the remaining competitive life of the award. Please refer to http://accounting.ucdavis.edu/EX/fandaexamples.cfm for some examples of changes that PIs should expect in common situations for sponsored projects covered by on-campus organized research rates. If PIs and departmental administrators have questions about what the rate change means for specific grants, they should contact Ahmad Hakim-Elahi in the Office of Research at ahakimelahi@ucdavis.edu or Kathy Hass in Accounting & Financial Services at kxhass@ucdavis.edu. In addition to the new rates for organized research, instruction and other sponsored activity, there are two other significant changes that result from the new rate agreement. The Institute for Toxicology and Environmental Health (ITEH) rate has been eliminated because core grant funding for the ITEH has ended. Moreover, the core grant rate for research at the California National Primate Research Center (CNPRC) has increased from 19.3% to 21.5% and a new rate for non-core grant activity at CNPRC has been established at 51%. Please note that awards covered by the CNPRC non-core grant rate and those covered by the other Sponsored Activity rate, made prior to the new rate agreement date of June 30, 2004, and funded at the older rates will continue at the rate awarded through the competitive segment of the award. This exception is made because a major, non-incremental change in these specific rates has occurred with no opportunity to budget proactively. Barry M. Klein Vice Chancellor--Research Stan Nosek Vice Chancellor--Administration 04-079
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