Sneak Preview: COGR Requests Faster F&A Cost Rate Approvals
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) An association representing research universities and institutions, in a recent letter to the Department of Health and Human Services (HHS) Cost Allocation Services (CAS), is requesting that the agency negotiate and approve indirect cost rate and fringe benefit rate agreements with research institutions in a timely manner.
Indirect cost rates, also known as facilities and administrative (F&A) cost rates, determine the reimbursement of F&A costs associated with federal research awards to research institutions (see ¶725 in the Federal Grants Management Module). Similarly, fringe benefit rates determine fringe benefit reimbursements applicable to the salary portion of direct charges on federal research awards. In the letter to the head of the HHS/CAS Program Support Center, the Council on Governmental Relations (COGR) explained that the research community has recently had challenges with the timely approval of both F&A and fringe benefit rate agreements.
“Since the COVID-19 pandemic, our members have experienced long delays in establishing timely F&A and fringe benefit rate agreements,” COGR explains. “While this is not an issue with the quality and professionalism of the CAS staff, it does appear to be an issue of CAS being under-resourced. In fact, CAS has introduced innovative ideas, such as the virtual campus visits, which have proven to be a time-saver for the research institutions and the federal government. Nonetheless, delays persist, and the impact to research institutions is significant.”
Among COGR’s concerns related to these delays include:
Budget uncertainty: Because research institutions depend on fair and predictable F&A and fringe benefit reimbursements to effectively support their research enterprise, the ability to manage awards within budgets and anticipate funding for indirect costs is compromised when the approval of these rates is delayed.
Financial and audit risk: When research institutions have not been able to establish F&A cost rates in a timely manner, they are reimbursed based on “provisional” rates. Later, if it is determined that these provisional rates overstated reimbursement, the institution will be required to refund the difference to the federal government either by direct payment or a reduction in its negotiated rates. COGR notes that implementing retroactive rates creates administrative burdens, and also increases audit risk due to necessary adjustments.
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