Carnegie Mellon University

Overhead and Indirect Cost Recovery Overview

Rates Lifecycle

  • Fixed Rates
    • Negotiated with Federal government (based on CMU projections)
    • Charged to Sponsored awards = F&A recovery
    • Provisional Rates –temporary rates superseded by Fixed Rates
  • Actual Rates
    • Rates calculated with actual expenses based on fiscal year activities
    • Compared to Fixed Rates to get annual variance/carryforward
    • Carryforward
    • Variance between the fixed (the charged rate) and the actual rate
    • Audited CFW amount is applied to a subsequent rate negotiation

Rate Preparation

Carnegie Mellon uses MAXIMUS CRIS.net, a software tool to prepare F&A rate proposals. This software incorporates all the reporting requirements of 2CFR Part 200-Uniform Administrative Requirement, Cost Principles and Audit Requirements for Federal Awards.

Department of Defense (DoD)

  • CMU assigned to the DoD for rate cognizance
  • 45 Institutions of Higher Education (IHE) assigned to the DoD
  • Most IHE are Department of Health and Human Services cognizant

Office of Naval Research (ONR)

  • ONR Indirect Cost Branch is responsible for administering (negotiation and approval) of indirect cost rates for the university.

Defense Contract Audit Agency (DCAA)

  • Provides audit services to DoD and other federal sponsors
  • Operates under the authority of the Under Secretary of Defense (Comptroller)/Chief Financial Officer
  • DCAA maintains an office at CMU
    • Auditing year-round
    • Two full-time and one to three part-time auditors on site
  • F&A: Recovery of university overhead or indirect costs from sponsored research activities (overhead = real costs).
  • F&A Rate: Facility overhead plus the administrative overhead divied by the modified total direct costs (MTDC) for research equals the percentage
  • Facility: Cost of the physical infrastructure of university identified as benefitting research through review of space utilization (exception Library)
  • Admin: Administrative costs of both central and department administration offices benefitting research
  • MTDC: Total direct cost less equipment expense, subcontracts > $25k, graduate tuition

Building

  • Depreciation expense for research buildings (new construction, purchases and renovations > $100k)
  • Renovations <$100k

Interest

  • Interest expense for bond-financed research buildings

Equipment Depreciation

  • Depreciation expense for non-sponsored equipment

Operation and Maintenance

  • General maintenance/utilities; protection/preservation of physical plant
  • Central: Facilities Management and Campus Services (FMCS), Campus Design and Facility Developement (CDFD), Environmental Health and Safety (EH&S), University Police, Insurance
  • Department funded FMCS activities (e.g., department moves, kitchen cleaning, day porters)

Library

  • Operating costs of university libraries
  • General Admin
    • Office of the President, accounting, Payroll, Office of the General Counsel, Institutional Research and Analysis, Office of Human Resources, University Audit Services, Budget and Financial Planning, Computing Services
    • University Advancement is not included in the general admin component
  • Sponsored Projects Admin
    • Office of the Vice President for Research, Office of Sponsored Projects (OSP), Sponsored Projects Accounting (SPA), Cost Analysis
  • Student Services Admin
    • University Health Services, Counseling and Psychological Services (CaPs)
  • Department Admin
    • Deans and department heads offices, academic business offices (personnel and pro rata share of non-sponsored operating expenses)
    • Federal “allowance” for faculty administrative efforts (3.6%)
    • Office of the Provost administrative office
Flowchart of F&A allocation methodology
General Admin 8.1%
Department Admin 14.6%
Sponsored Projects Admin 3.7%
Student Services Admin 1.1%
Uncaped Admin Rate 27.4%
Capped Admin Rate 26.0%

 

Building Depreciation 7.2%
Interest 3.8%
Equipment Depreciation 2.7%
Operations and Maintenance 11.0%
Library 4.0%
Facility Rate 28.6%

 

  • Effective overhead rates equals the F&A rate divided by the total direct sponsored cost
  • FY19 effective rate = 21 percent