DHHS Rate Agreement
Northwestern applies different Facilities and Administrative (F&A) rates - sometimes called "indirect cost rates" - to sponsored projects, depending on the nature of the individual sponsored projects. Northwestern negotiates its F&A rates with the federal government, specifically the Department of Health and Human Services ("DHHS"), every few years.
In order to determine the applicable F&A rate for a sponsored project, consider the following: the funding source (federal or non-federal; grant or contract); the project type (research, instruction/training, other sponsored activity); whether the project is on-campus or off-campus; and the start date of the project. Note that solicitations occasionally include capped F&A rates.
Effective as of August 15, 2017:
Use the 58% provisional rate for a submissions utilizing a 09/01/17 start date (or later) keep indirect costs at provisional rate for all out years of the budget
NOA’s with an awarded date (not start date) prior to 09/01/17 will use the 56.5% indirect cost rate for all years of the project
NOA’s with an awarded date (not start date) on or after 09/01/17 will use the 58% indirect cost rate for all years of the project
Modified Total Direct Costs (MTDC)
Unless otherwise indicated, all rates listed in the DHHS Rate Agreement (06/22/18) use the indirect costing methodology of Modified Total Direct Costs (MTDC). MTDC is defined as the sum of all proposed direct costs, minus the following expenditure accounts/exclusions:
- 77535: Fabricated Equipment (fabrication cost of $5,000 or more and a useful life of at least one year)
- 75490: Space Rental
- 75720: Hospital Medical Expenses (Research Patient Care Costs)
- 76910-76960: Internal Telecommunication Expenses
- 77510-77599: Capital Equipment (acquisition cost of $5,000 or more and a useful life of at least one year)
- 78010-78080: Tuition and Stipends
- 78510: Amortization
- 78650: Subcontracts in Excess of the First $25,000
Total Direct Costs (TDC) is an alternative approach to the application of F&A. TDC applies F&A to the sum of all proposed direct costs.
For sponsors that publish and reimburse F&A rates lower than Northwestern's established rates (typically voluntary health organizations, or charitable foundations), a TDC approach should be used, unless an MDTC approach, or specific individual cost exclusions, is specifically identified in the sponsor's published rate.
Budget Justification Statement for Federal Proposal Budgets
Add the following statement to new, competitive renewal and supplement proposal budget justifications on federal projects (except NIH modular grants, which justifications do not require this language):
F&A has been calculated based on the following DHHS approved rates:
- 55.5% MTDC 09/01/15 - 08/31/16 - Predetermined
- 56.5% MTDC 09/01/16 - 08/31/17 - Predetermined
- 58.0% MTDC 09/01/17 - 08/31/18 and thereafter
Other Sponsored Activity Projects
Per OMB Circular A-21, “other sponsored activities” means programs and projects financed by Federal and non-Federal agencies and organizations which involve the performance of work other than instruction and organized research.
Examples of "Other Sponsored Activity" include: 1) public service projects, such as sponsored health and/or community service projects, legal clinics and public information services; 2) contract-for-service activities, such as material testing agreements; 3) curriculum development projects; and 4) sponsored symposia, workshops, seminars and conferences.
Investigators should consult with Sponsored Research to determine a project’s appropriate F&A rate, given the sponsor, solicitation, nature and location of the proposed activity.