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Special Facilities Fee

December 16, 2010 Memo from the Office of the Vice President of Research Dr. Jaun Sanchez [PDF]

TO: Deans, Directors, Chairs and Principal Investigators

FROM: Juan M. Sanchez, Vice President for Research

DATE: December 16, 2010

SUBJECT: New Process for Funding Research Infrastructure for Industry Contracts/Awards - Special Facilities Fee

Due to limitations imposed on the University's ability to fully recover Facilities and Administrative (F&A) costs, also known as indirect costs, currently there are limited means to accumulate the financial resources that are needed to replace or repair major research infrastructure. If the infrastructure unit is part of a University approved user facility, the user charges can accrue over time to support repair and possibly replacement. However, there are many more instruments and considerable research infrastructure that are not part of University-designated user facilities. In these cases costs for repairs or replacement are generally paid from a combination of gift funds, one-time special allocations, discretionary accounts, and direct research funds. All too often the costs exceed the available resources in an organized research unit.

The University allows proposals submitted to industry sponsors to bear the true F&A/indirect costs rate for facilities used in the research. For proposals submitted under the FY10-11 negotiated rate, this represents an increase of 9.19% to arrive at a new industry rate of 62.69%. The decision to ask for this rate from industry sponsors resides with the principal investigators (PIs) at the time a proposal is submitted. Accounts carrying the additional indirect rate for the Special Facilities Fee will have the associated indirect costs returned to the colleges/schools annually on the same cycle as the normal institutional return of indirect costs. The colleges/schools will receive an annual statement indicating the balances of the Special Facilities Fee that have been earned by PIs in their units for the prior year. The Special Facilities Fee funds are intended to be used for repair, replacement and/or major upgrades of facilities. Requests to use the funds will be made to and managed by the colleges/schools.

The additional overhead charge for the Special Facilities Fee is based on the difference between the true calculated indirect costs associated with the facilities needed to conduct the research and the rate that is determined and ultimately reduced through negotiations with the University's cognizant agency, the US Department of Health and Human Services. The University calculates the F&A/indirect costs rates for buildings, equipment, and operations and maintenance using a prescribed method. The negotiated rate that can be charged against federal awards is currently 53.5% or 9.19% less in these three categories of costs. The Proposal Review Form allows PIs to elect into the higher overhead rate for industry proposals.

The following table indicates the adjustments through FY13/14

Year
Negotiated Rate
Special Facilities Fee
Adjusted Industry F&A Rate
FY10/11
53.50%
9.19%
62.69%
FY11/12
54.00%
10.92%
64.92%
FY12/13
54.00%
13.01%
67.01%
FY13/14
54.50%
14.49%
68.99%