New Facilities and Administrative Cost Rates (F&A) for FY2026 and Beyond
July 9, 2025
Implementation Guidelines
The University of Alabama at Birmingham (UAB) submitted the Facilities and Administrative (F&A) Rate Cost Proposal August 30, 2024, to the federal Department of Health and Human Services (DHHS). UAB recently completed negotiations with the DHHS which resulted in a new F&A Cost Rate Agreement. The new Rate Agreement is effective immediately with the following new indirect cost rates.
|
Activity |
Location |
From |
To |
Rate (%) |
|
Organized Research |
On-Campus |
10/1/2023 |
9/30/2025 |
48.50 |
|
10/1/2025 |
9/30/2028 |
49.00 |
||
|
Instruction |
On-Campus |
10/1/2023 |
9/30/2025 |
45.00 |
|
10/1/2025 |
9/30/2028 |
46.00 |
||
|
Other Sponsored Activities |
On-Campus |
10/1/2023 |
9/30/2028 |
36.00 |
|
IPA |
Off-Campus |
10/1/2023 |
9/30/2025 |
5.40 |
|
10/1/2025 |
9/30/2028 |
7.00 |
||
|
All Programs |
Off-Campus |
10/1/2023 |
9/30/2028 |
26.00 |
As an additional note, the new indirect cost rate agreement retains the historical definition of ‘Modified Total Direct Costs’ (MTDC); therefore, the thresholds remain at $25,000 for subawards and $5,000 for equipment through 9/30/2025. Effective 10/1/2025, the thresholds are updated at $50,000 for subawards and $10,000 for equipment.
UAB is monitoring ongoing discussions within the federal government and agency actions to unilaterally implement a flat indirect cost rate of 15%. Currently a flat indirect cost rate is not in effect for any federal agency. Investigators must continue to use UAB’s federally negotiated indirect cost rates on proposal submissions unless directed otherwise by the Office of Sponsored Programs or UAB Financial Affairs.
How Does This New Schedule Impact My Proposal or Existing Award?
The following implementation guidelines are provided to assist in the application of indirect cost rates on existing awards, pending proposal and project submissions, as well as new proposal and project submissions.
Existing Projects/Awards That Incorporated Previous F&A Rates
- Existing projects will remain at the awarded F&A rate until the end of the project period specified in the award/agreement.
New Proposal and Project Submissions
- All new proposal and project submissions that will have a budget period beginning on or after 10/1/2025 should include the new F&A rates as detailed in the university’s new Indirect Cost Rate Agreement.
Existing/Pending Proposals and Project Submissions That Incorporated Previous F&A Rates
Projects with Non-capped Budgets (see definition below)
- Upon receipt of a Just-in-Time request, the Office of Sponsored Programs will provide the sponsor with a revised budget incorporating the new rate and a copy of the university’s new F&A rate agreement.
- Upon receipt of an award that has a start date on or after 10/1/2025, the Office of Sponsored Programs will provide the sponsor with a copy of the new F&A rate agreement and request that the sponsor honor the new rate and issue an updated award notice.
Projects with Capped Budgets (see definition below)
- Projects with capped budgets will be allowed to proceed with the originally proposed F&A rate for the full project period.
Definitions
- Capped Budget
- A budget in which the sum of the direct and indirect costs (total budget) may not exceed a specific dollar amount as defined by the sponsor (e.g., the sponsor will only provide a total budget of $150,000 regardless of the F&A rate applied).
- Non-capped Budget
- A budget in which the sum of the direct and indirect costs (total budget) may vary depending upon the indirect cost rate applied to the project. Note that while the direct cost component may be capped/limited by the sponsor, the total project budget is dependent upon the F&A rate applied.
Questions
If you have questions or require guidance, please contact your assigned Officer in the Office of Sponsored Programs.