The federal government provides reimbursement for these indirect, but necessary, costs of research as part of grant funding. The costs are documented by the universities and reviewed by government auditors. Federal agency negotiators and university administrators agree on an overall percentage of allowed facilities and administrative costs to be reimbursed to the university. The facilities and administrative cost components of grant funding are often misunderstood.
Reference is made to a particular rate that has been negotiated at a particular university.
That is not correct. Over the past 10 years, significant changes have been made in federal reimbursement policies for facilities and administrative costs. In 1993, OMB extended the cap to more costs, and it also specified methods for more consistent calculation and treatment of costs. This provision replaced an earlier OMB proposal to base federal reimbursement of construction costs on regional benchmarks. OMB also deferred elimination of cost analysis studies for determining library costs.