F&A Proposal Preparation & Negotiation, and Application of Negotiated F&A Rates An Introduction to...
-
Upload
lawrence-warren -
Category
Documents
-
view
215 -
download
0
Transcript of F&A Proposal Preparation & Negotiation, and Application of Negotiated F&A Rates An Introduction to...
F&A Proposal Preparation & Negotiation, and Application of Negotiated F&A Rates
An Introduction to the Process
Pre-Conference October 12, 2015
2
Presenters
Jim Carter Managing Director Huron Consulting Group
Mike Legrand Director, Costing Policy and Analysis University of California, Davis
Where to Start?
4
Not Just Colleges & Universities
Not-for-profit Organizations Hospitals State And Local Governments
5
Regulations
Uniform Guidance (2 CFR Part 200) Colleges And Universities (Old circular: A-21) Not-for-profits (Old circular: A-122) State & Local Governments (Old circular: A-
87) Not covered in this presentation
Hospitals – OASC-3 For-profits – FARS
Uniform Guidance and OASC-3 are part of the Code of Federal Regulations (CFR)
6
Different Terminology – Same Concept Facilities And Administrative (F&A) Rates
Colleges and Universities Indirect Costs
Non-profit State and Local governments Hospitals (OASC-3) CAS
Burden Rates Overhead Rates
Cost Reimbursement
8
Not a New Idea
Most grants are cost reimbursement You spend the money The Sponsor pays you back what you
already have spent
9
Reimbursement is Easyfor Some Costs
Salaries Animals Supplies
Directly Benefit the Grant
10
Reimbursement is Harder for Other Costs
Buildings Equipment Utilities and Maintenance Writing pay checks Top quality grant administration Top quality department support
Benefit Many Grants and Activities
Indirect Costs
11
What is Indirect Cost?
An indirect cost is a cost that benefits different activities and cannot be easily identified to
benefit any one activity.
12
Direct Cost
Indirect Cost
Total Cost
13
Work the Equation
Total Cost
Direct Cost
??????
14
Work It Further
Indirect Cost
Direct Cost
Indirect Cost Rate
15
How It Works
Indirect Costs are NOT reimbursed on specific identification
Indirect Cost Rate is applied to a Direct Cost Base
Indirect Cost Rate
Direct
Cost Base
Indirect
Cost Recovery
16
Is It That Simple?
17
Of Course Not
Exclusions Allowable Costs Unallowable Costs Allowances Limitations – Caps Multiple Rates Multiple Rate Bases Multiple Rate Types
How to Prepare aFacilities and
AdministrativeCost Proposal
19
How To Prepare An F&A Proposal – At a Glance
Start with Financial
Statement
Adjust to Modified Total
Cost
Assign expenditures to
cost pools
Remove unallowable costs from
pools*
Allocate pool costs to major
functions (bases)
Calculate Rates:Indirect /
Modified Total Direct Costs
1 2 3
456
20
Start with Financial Statement, ExpendituresExample of Major Functions in Higher Education*
Instruction
Organized Research
Other Sponsored Activities
Other Institutional Activities
*Classification of major functions for F&A proposals may differ depending on types of institutions
1
21
Adjust to Modified Total Costs
Adjust To Modified Total Cost Minus Non-MTDC Items
Student Financial Aid Capital Expenditures Double Counted Items Patient Care Participant Support
Add Allocations State Wide Cost Allocations Parent University Allocations University System Allocations
2
22
Costs are classified as Direct vs. Indirect (F&A)
Direct costs: PI Salary, Lab Supplies, Fringe Benefits, Animals, Post-Doc Salaries, Travel, etc.
Indirect costs: Admin Salary, General support, Office computer, Library, Building, Custodial Services, etc.
3
F&A Costs
Building
Office Computer
Admin
Salary
Direct Costs
PI Salar
y
Lab Supplies
Fringe
Benefits
23
Facilities Related Costs
Building Depreciation/ Use Allowance
Equipment Depreciation/ Use Allowance
Interest Operations &
Maintenance Library
Administrative Related Costs
General Administration (GA)*
Department Administration (DA)*
Sponsored Projects Administration (SPA)*
Student Services
Assign Expenditures to Cost Pools Identify Indirect Costs and Put in Pools
3
24
Remove Unallowable Costs from Pools
Identify Unallowable Indirect Costs Fund Raising Entertainment Alcohol Royalties Judgments Fines Taxes
Eliminate From Indirect Cost Leave In Direct Cost
4
25
Allocate Pool Costs to Major Functions
Identify Direct Costs and allocate to Bases (major functions) Instruction, Organized Research, etc.
Remember Formula Modified Total Costs- Indirect Cost=Modified Total Direct Costs
5
26
Allocation
F&A F&A F&A F&A
Allowable Facilities Related Indirect Costs
AllowableAdministrati
ve Indirect Costs
Organized Research
MTDC
Instruction MTDC
Other Sponsored Activities
MTDC
Other Institutional Activities
MTDC
Bases:
Pools:
5
27
Allocation
5
F&A Pool Allocation MethodBuilding Depreciation Space Study – Functionalized ASF
Equipment Depreciation Space Study – Functionalized ASF
Capital Interest Specific identification / Space Study – Functionalized ASF
Operations & Maintenance
Space Study – Functionalized ASF, plus utility cost adjustment
Library User FTE’s & S&W or Special use survey
General Admin MTDC of functions receiving services
Departmental Admin Complex: Pool for each department / formula driven based on faculty salaries and charging of support staff
Sponsored Projects Admin MTDC of functions receiving SPA services
Student Services 100% to instruction
28
Calculate Rates
Calculate Rate per Major Function
Indirect Cost= F&A Rate
Modified Total Direct Cost
6
Exercise
30
Reconciliation Schedule 1
31
Reconciliation Schedule 2
32
Reconciliation Schedule 3
33
Reconciliation Schedule 4
34
Reconciliation Schedule 5
35
Quiz-Complete the Instruction Rate
Schedule
Comparative Anatomy
38
Comparative Anatomy Colleges and Universities (Uniform Guidance)
Short-Form Long-Form
Non-profit (Uniform Guidance) Free Form Isolate Fund Raising
Hospitals (OASC – 3 http://rates.psc.gov/fms/dca/cfr45_pt74_appx_e.html )
Follow Medicare Cost Plan State and Local Governments (Uniform Guidance)
Follows Cost Elements
39
Comparative Anatomy
Short Form One Rate S&W or MTDC Weak Departmental Allowance O&M Carve Out For Auxiliaries Low Rates Easy To Review S&W Adds Insult To Injury
40
Comparative Anatomy
Long-Form Organized Research Requires Detailed Space Survey Requires Detailed Cost-Sharing Data Formula Departmental Administration Faculty Administrative Allowance Capped Administration Incorporates Cost Accounting Standards Mandated Reporting Format
41
Comparative Anatomy
A-122 Not-Profits Depends Upon Organization Structure Separate Fund Raising Separate Public Service Isolate Federally Funded Activities No Definition Of Departmental Administration No Definition Of Sponsored Projects
Administration
Exercise
43
Indirect Cost Rate Proposal – Salaries and Wages Base
Quiz
Negotiation and Strategic Planning
46
Negotiating an F&A Rate
Step One – Find A Cognizant Agency Predominant Funding
Only HHS Or DOD-ONR For Higher Education Can Be Any Agency For Others
47
Negotiating an F&A Rate
Cognizant Agency Sole Federal agency responsible for
negotiating rates Same negotiated rates across all agencies Doesn’t mean they will be paid Effort to align with funding Can cause problems
May be different for audit
48
Negotiating an F&A Rate
Step Two – Determine Type of Rate Predetermined
Most Common Requires History Can Be For Up To Five Years Not For Hospitals
Fixed With Carry-Forward Provisional/Final
49
Negotiating an F&A Rate
Step Three – Submit the Rate Proposal Appropriate Cognizant Agency Appropriate Office
50
Negotiating an F&A Rate
Step Four – Wait
51
Negotiating an F&A Rate
Next Steps - HHS Wait Desk Review Questions Site Visit Questions Negotiations
52
Negotiating an F&A Rate
Next Steps - HHS Desk Review
Takes place at HHS office May involve phone calls Could result in rate offer Usually results in written questions and data
requests
53
Negotiating an F&A Rate
Next Steps - HHS Questions
Usually very detailed Sometimes hard to understand Usually requires a lot of work to comply Best to answer thoroughly Just answer the questions
54
Negotiating an F&A Rate
Next Steps - HHS Site Visit
1-3 Days Have an Entrance Meeting to set the Ground Rules Walk space Meet department heads/Principal Investigators Ask more questions Get away from the office
55
Negotiating an F&A Rate
Next Steps - HHS Questions
If no negotiations Should address specific questions Must be taken seriously Keep copies of all responses Do not show shock Respond Quickly
56
Negotiating an F&A Rate
Next Steps - HHS Negotiations
Not always based on facts What is best for institution Live to fight again Hard to judge success
57
Negotiating an F&A Rate
Other Agencies DOD/ONR
58
So what you basically are saying is that our proposal is what….too high?
William J. Tisch, University of Arizona
59
Other Useful Information
You Must Have An Award Paying Full Indirect Cost to Get a Rate from HHS
Do Not Expect to Get Respect You Are Always Wrong Your Rate Is Always Too High You Are Always In The Middle
60
Strategic Planning
Rate calculation Reconciliation is critical Accuracy is important Remember your audience Should you get help?
Proposal preparation Mandatory format Creativity not appreciated Tie it out
61
Strategic Planning
Timing No good answer All things being equal, be on time
Requested rate Sometimes you need to tip your hand Do not ask for the rate you must negotiate Negotiation is a downward process
62
Strategic Planning
Rate period Go long when your rate is going down Go short when your rate is going up How much pain can you stand
Negotiation process Who should participate Who will baby-sit Prep the departments What rate is acceptable
63
How to Collect Indirect Cost
Put it in the proposal budget 8% Off-campus Full Rate Discounted Rate
Get it awarded Spend the direct costs Bill the indirect costs