Preaward-Proposal FAQs
- Do I need a Proposal Routing Sheet for....?
- Why is it so hard to get Overhead/F&A/IDC Waivers?
If overhead is waived for a project then the indirect costs (Facilities and Administrative Costs) associated with the research need to be covered by another source. This source is usually the State of Arizona .
There must be a demonstrable benefit to the State of Arizona for absorbing the indirect costs in order to get an overhead waiver. Examples of valid justifications include: support for curriculum development, training grants, and projects funded by non-profit sponsors with a public service objective.
An example of an inadequate justification is one that simply states that the project supports the mission of the University, or one that indicates there isn't enough money to complete the proposed scope of work if the project must pay indirect costs.
Indirect cost waivers for projects supported by industry are generally not approved. This is because for-profit industrial sponsors are in business to make a profit and they generally contribute in some way to the sponsor's bottom line. It is not in the University's mission to contribute to our industrial sponsor's profit margin.
The procedure for requesting an indirect cost waiver is simple. Before routing your proposal through Sponsored Projects, send your request for an indirect cost waiver to the Vice President for Research, Admin. Bldg. 601 (or fax to 621-7507). Your request should include:
• Proposal Routing Sheet signed by department head and dean.
• Budget and budget justification.
• Justification for the reduced rate, explaining the benefit to the University for accepting the project at the reduced rate.
- What is the F&A Rate?
“F&A rate” is the new term for indirect cost rate. F&A = facilities and administration. When OMB revised Circular A-21 in 1996, F&A rate was adopted to replace the old term “indirect cost rate”. This change was implemented to reflect the components of indirect cost rate.
F&A rate is made up of eight components. Each component represents a cost pool that supports our research activities. Our current (FY05-06) on-campus research F&A rate of 50.5% is broken into the following cost pools:
On-Campus Organized Research F&A Rate Component |
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Administration Components: |
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General Administration |
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7.10% |
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Departmental Administration |
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16.80% |
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Sponsored Projects Administration |
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2.10% |
Total Administration |
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26.00% |
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Facilities Components: |
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Building Depreciation |
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3.90% |
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Equipment Depreciation |
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3.50% |
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Interest |
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2.70% |
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Operations & Maintenance |
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12.20% |
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Library |
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2.20% |
Total Facilities |
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24.50% |
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Total On-Campus Rate |
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50.50% |
- On the PRS, what happens if the Credit / F&A Columns are left blank?
“If Award Credit and/or F & A Cost columns are left blank, the Principal Investigator and Department noted on the first line will be credited at 100%.” (Taken from the current PRS). If the PI/Departments/Colleges need to change the Award Credit or F&A Allocation, a revised, fully-signed Proposal Routing Sheet is required.
- What is the NIH Salary Cap?
Click the link for the current NIH Salary Cap, and to see a list of historical salary caps: http://grants2.nih.gov/grants/policy/salcap_summary.htm
The NIH Salary Cap applies to the individual's institutional base salary. An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. The Congressional Act that appropriates funds for the Department of Health and Human Services (including the NIH, AHRQ, and SAMHSA - see below) states that none of the funds may be used to pay an individual (via a grant, agreement, or other award mechanism) in excess of Executive Level I on the Federal Executive Pay Scale, i.e., the Salary Cap.
The most common errors in using the salary cap on proposal budgets:
- Assuming the cap refers only to salary requested, not the base salary. For instance, you might only be asking for $10,000 in PI salary on your NIH proposal, but if the base salary is higher than the cap, you'll have to make an adjustment.
- Applying inflation to the salary cap in out years. The salary cap should remain flat across the budget years proposed. The cap should not be increased by an inflationary percentage.
- Not adjusting the salary cap to match the appointment - the salary cap is for a 12-month period. That means that the cap amount is reduced for the 9-month academic period.
Sample NIH Salary Cap calculations for your proposal budget:
Example 1. Individual with Full-Time Appointment (based on grant award/contract issued after January 1, 2006 with a $183,500 salary limitation)
Individual's institutional base salary for a FULL-TIME twelve month) appointment |
$ 195,000 |
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Research effort requested in application/proposal - 50% |
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Direct Salary requested |
$ 97,500 |
Fringe benefits requested (25.8% of salary) |
$ 25,155 |
Subtotal |
$ 122,655 |
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Applicant organization's F&A (indirect) costs at a rate of 51% of subtotal |
$ 62,554 |
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Amount requested - salary plus fringe benefits plus associated F&A (indirect) costs |
$ 185,209 |
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If a grant/contract is to be funded, the amount included for the above individual will be calculated as follows: |
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Direct salary - restricted to a RATE of |
$ 183,500 |
Multiplied by effort (50%) to be devoted to project |
$ 91,750 |
Fringe benefits (25.8% of allowable salary) |
$ 23,672 |
Subtotal |
$ 115,422 |
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Associated F&A (indirect) costs at 51% of subtotal |
$ 58,865 |
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Total amount to be awarded due to salary limitation |
$ 174,287 |
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Amount of reduction due to salary limitation |
($185,209 requested minus $174,287 awarded) |
$ 10,922 |
Example 2. Individual with Half-Time Appointment (based on a grant award/contract issued after January 1, 2006 with a $183,500 salary limitation)
Individual's institutional base salary for a HALF-TIME appointment (50% of a full-time twelve month appointment) |
$ 97,500 |
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Research effort requested in application/proposal 30% |
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Direct Salary requested |
$ 29,250 |
Fringe benefits requested (25.8% of salary) |
$ 7,547 |
Subtotal |
$ 36,797 |
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Applicant organization's F&A (indirect) costs at a rate of 51% of subtotal |
$ 18,766 |
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Amount requested - salary plus fringe benefits |
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plus associated F&A (indirect) costs |
$ 55,563 |
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If a grant/contract is to be funded, the amount included in the award for the above individual will be calculated as follows: |
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Direct salary - restricted to a RATE of |
$ 91,750 |
For a 50% appointment multiplied by 30% effort |
$ 27,525 |
Fringe benefits (25.8% of allowable salary) |
$ 7,101 |
Subtotal |
$ 34,626 |
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Associated F&A (indirect) cost at 51% of subtotal |
$ 17,659 |
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Total amount to be awarded due to salary limitation |
$ 52,285 |
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Amount of reduction due to salary limitation |
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($55,563 requested minus $52,285 awarded) |
$ 3,278 |
- How does the NIH Salary Cap affect the salary distribution of an individual?
For more than a decade, Congress has legislatively mandated a provision for the limitation of salary. Each year, the Consolidated Appropriations Act issued by Congress includes this provision to restrict the amount of direct salary of an individual to Executive Level I of the Federal Executive Pay scale. This salary limitation applies to individuals under grants, agreements, or applicable contracts issued by the National Institutes of Health (NIH), the Agency for Healthcare Research and Quality (AHRQ), and the Substance Abuse and Mental Health Services Administration (SAMHSA).
To ensure an individual's salary is not over the NIH salary limitation (cap), both budgeting process and salary charging process need to be monitored carefully. For example, an individual's effort on a grant is budgeted at 10%. Normally, the salary distribution on the grant for this individual would be set at 10%. This is OK when the individual's base salary is under the salary cap prescribed by NIH each year. But if the individual's base salary is higher than the cap, charging 10% of his or her salary on the grant may result in over-the-cap salary. Thus, it is essential to consider the NIH salary cap when setting up the salary distribution for individuals whose base salaries are over the cap. What equally important is to set the base salary of an individual to the cap in the grant budget when the individual's base salary is higher than the cap.
- Why must my proposal budget include F&A on Subawards?
Not all costs related to subcontracts are borne by the subcontractor. ORCA has to negotiate the terms of the subcontract, monitor any flow down provisions, and ensure that the University is covered legally. The department has to prepare a purchase requisition which results in Purchasing sending a Purchase Order to the subcontractee. The PI is responsible for ensuring that the terms of the subcontracts are met. Accounts Payable has to prepare payments related to the invoices generated by the subcontractees. And finally, Sponsored Projects has to ensure that the sponsor requirements for subcontracts have been met and that terms of the F&A charges have been applied to the subcontract according to the initial award.
OMB Circular A-21, which governs the determination and application of F&A cost rates for all federal agencies, states in section G2 that “F&A costs shall be distributed…..on the basis of modified total direct costs …to subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract).” Further “each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs.” This special treatment of subawards recognizes the reduced expenses borne by the university for subawards by shielding all but the 1 st $25,000 of each subaward from F&A charges. The F&A that is charged covers university's costs such as those noted above. Lastly, it should be noted that competitive renewals of grants that contain subawards are considered “new awards” and therefore the application of the $25,000 threshold begins anew.
- Why is Graduate Tuition Remission unallowable on certain USDA proposals/awards?
(This FAQ is posted under the proposal section because of the affects on the proposal budget. When preparing a proposal to USDA CSREES, or other agencies that do not allow tuition remission as a direct charge, the department/PI must indicate, on the Proposal Routing Sheet, that they will cover the graduate tuition remission costs from departmental funds.)
The University is now including tuition remission in our fringe benefit rate for graduate students and an employee tuition benefit for faculty and staff; these costs are unallowable costs on USDA grants from the CSREES.
Sponsored Projects received numerous complaints from both the departments and the Financial Services Office when we enforced the removal of these costs. We called our peer Land Grant institutions and asked them what their practices were. Every response was that it was an unallowable charge on USDA, CSREES grants.
We also obtained clarification from USDA regarding charging graduate tuition remission to grants.
The Cooperative State Research, Education, and Extension Service (CSREES) grant programs for which section 1473 of the National Research, Extension, and Teaching Policy Act (NARETPA) of 1977 would apply. This section states that funds made available by the Secretary under the established Federal-State partnership arrangement to State Cooperative intuitions under the Acts referred in section 1044(16) of this title and funds made available under subsection (c)(1)(B) and subsection (d) of section 2 of Act of August 4, 1965 (7 U.S.C 450i) shall not be subject to reduction for indirect costs or for tuition remission. Consequently, the tuition remission component of the fringe benefit rate would need to be removed from the fringe benefit rate for those CSREES grant programs for which NARETPTA section 1473 would apply.
From Memo dated 6/13/2005
Ellen Danus - Branch Chief, Policy, Oversight, and Funds Management Branch - Office of Extramural Programs
Even though this represents a financial burden on the departments who are applying and receiving these grants, the University cannot break a public law and allow these costs.
- Is the UA an Hispanic-Serving Institution? Minority Institution?
The University of Arizona IS NOT an Hispanic-Serving Institution or a Minority Institution.
Minority Institution: an institution of higher education whose enrollment of a single minority or a combination of minorities exceeds 50% of total enrollment.
Hispanic-Serving Institution: the enrollment of Hispanic students is at least 25% of total enrollment.
Again, the UA does not meet either of these enrollment percents. The UA South is designated as an Hispanic-Serving Institution (branch campuses are eligible for separate designations from the main campus). The UA South is the only part of the institution allowed to compete for funding opportunties where HSI designation is required. Other departments may collaborate on such submissions, but the proposed work must be led by UA South, and benefit UA South students.
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