901 How F & A Rate is Calculated and Negotiated

The Facilities and Administration rate (commonly referred to as indirect cost rate or F&A Rate) is based on the latest update of OMB (Office of Management and Budget) Circular A-21. The F&A Cost Proposal is prepared by OSU Business Affairs' Financial Accounting & Analysis Unit. Negotiations are completed by the VP for Finance and Administration with staff from the US Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA). DHHS-DCA is OSU's cognizant agency responsible for negotiating and approving rates for OSU on behalf of all Federal agencies. Negotiated rates are usually established for a 3-4 year period.

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902 MTDC Rate

MTDC is the Modified Total Direct Cost method of calculating of the Facilities and Administration rate and is the method required for use by Oregon State University. The process is as follows:

• Establish the total costs incurred for the institution for the base period.
• Establish a F&A cost pool consisting of the expenditures (exclusive of capital items and other costs specifically identified as unallowable).
• General administrative and general expenses (exclusive of costs of student administration and services, student activities, student aid, and scholarships).
• Operation and maintenance of university-owned facilities and depreciation after appropriate adjustment for costs applicable to other institutional activities.
• Library
• Departmental administration expenses.
• Sponsored project administration.
• Building depreciation
• Equipment depreciation
• Interest on bonds
• Establish a MTDC distribution base: (1) that consists of all the institution's instruction, research, other sponsored activities, and other instructional activities.
• Calculate the rate by dividing the MTDC base: (1) into each of the F&A cost pools (2) and adding the results together.
• Establish the F&A cost rate, determined by dividing the amount in the F&A cost pool by the amount of the modified total direct cost base. This rate is then audited by DHHS and further refined (negotiated) as final.

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903 Current Rates

These rates consist of the following:

• On-Campus Research
• Off-Campus Research
• On-Campus Other Sponsored Activities
• Off-Campus Other Sponsored Activities
• Vessel Operation (Wecoma)

See the "Rates, Proposals and Financial Information" section within the OSU Research website under the Office of Sponsored Programs and Research Compliance web page on the OSU Research website.