Lehigh recently concluded negotiations with the Office of Naval Research (ONR) for our facilities and administrative (F&A) rates for fiscal years 2025 through 2027. Under the agreement with ONR, which negotiates with Lehigh on behalf of all U.S. federal funding agencies, Lehigh’s new F&A rates are as follows:
-
On-campus organized has increased from 61% to 65%
-
On-campus instruction has increased from 55.76% to 59.73%
-
On-campus Other Sponsored Activities rate has decreased from 44.6% to 38.39%.
-
Off campus rates in all categories remains capped at 26%
Lehigh University Facilities and Administrative Rate Agreement
Email communication was sent to the campus on June 28, 2024 announcing the new rates.
Questions regarding the implementation of these new rates may be directed to your Contract and Grant Specialist.
FAQs on New F&A Rate
Lehigh University’s rate has historically been negotiated every four years. This current rate is negotiated between Lehigh University and the Office of Naval Research. Lehigh submitted its proposal in 2023 using base year activities from Fiscal Year 2023. From this data, our rates for organized research, instruction and other sponsored activities were derived.
Lehigh has not had a rate increase since fiscal year 2010, when our 61% on campus organized research rate was negotiated. We used to negotiate the rate agreement every four years. However, now the frequency of our negotiation has been changed to be conducted every three years.
Specifically at Lehigh, several factors have contributed to this 4% increase, including growth in the volume of our sponsored research along with the facility components of our research base (i.e. Operation and Maintenance of Plant, Depreciation, and Interest). For example, the new buildings for Health, Science, Technology, and Business Innovation that have been completed since our last rate negotiation, resulting in increased operating costs and depreciation.
Yes, per Lehigh policy, the new rates apply to all extramurally sponsored projects.
The new rates should be used immediately.
Unless sponsor policies or terms and conditions state otherwise, supplemental funding will be considered new funding. Any application for new funding should incorporate the new rates with one exception. The National Science Foundation has a policy of funding supplemental support using the negotiated rate approved at the time of the initial awards, so supplemental proposals to the NSF should use the original rates from the award. See the NSF PAPPG Chapter X.D.1.d.
Competing renewal applications should use the appropriate F&A rate specified in the new rate agreement, regardless of the rate used in the previous segment.
Yes, proposals previously submitted and approved at the 61% rate will be honored for the initial award period or competitive segment, which is the period of performance approved by the sponsor at that time of award.
Rates currently in effect on active awards will be continued until the end of the current competitive segment.
Carryover is subject to the F&A rate in effect when the costs were incurred.
The rate approved by the sponsor at the time of the award will continue for the remainder of the award period.
Understanding Facilities & Administrative Rates
Research at universities is a resource-intensive endeavor. While researchers focus on groundbreaking discoveries, it is important to understand the underlying support system that makes these achievements possible. One key component of this support system is Facilities & Administrative (F&A) costs, also known as indirect costs or overhead. These are essential expenses that ensure the sustainability and quality of the research environment.
F&A costs are expenses that support the overall infrastructure required for research activities but cannot be directly attributed to a specific project. Think of them as the backbone of the research environment, providing the necessary support to maintain high-quality facilities and services. These costs include utilities, administrative support, maintenance, and compliance with federal regulations.
At Lehigh, for every dollar spent directly on research at Lehigh, an additional 71 cents, (our actual cost), is spent supporting those activities. F&A on sponsored activities cover most – but not all – of those additional costs.
Imagine you’re working in a well-equipped laboratory. The electricity powering your equipment, the clean and safe environment, and the administrative support helping with grant management are all covered by F&A costs.
Other examples include:
-
Facilities: F&A reimbursement helps to ensure buildings are maintained, utilities are provided (electricity, water, heating, cooling), and custodial services are available.
-
Administrative Support: F&A reimbursement helps to cover salaries of administrative staff who manage grants, ensure compliance, and support research activities.
-
Libraries and IT Services: F&A reimbursement contributes to providing access to research databases, internet connectivity, technical support, and data security.
-
Safety and Compliance: F&A reimbursement contributes to environmental health and safety services, institutional review boards (IRBs), and other vital compliance functions
These costs are not a tax on research but an investment in the institution’s ability to conduct and support cutting-edge research now and in the future.
The process of determining these rates involves the rigorous calculation of the actual costs of doing research at the university (that’s how we know it costs an additional 71 cents on the dollar at Lehigh). Based on this information, F&A rates are determined through a negotiation process between the university and federal agencies. This ensures that the rates are fair, justifiable, and reflective of the actual costs incurred by the institution.
It is important to note that the negotiation process can be quite lengthy, usually beginning two years before the final proposal is submitted for review, negotiation and approval. There is also an audit conducted by the cognizant agency’s audit arm, to verify the methodology and data supporting the proposal.
Universities with a high volume of research activities tend to have higher IC rates because they require more extensive infrastructure, support services, and administrative oversight to manage their research portfolios. However, these rates can also be affected by factors like the cost of living in an area that affects staff salaries. State system universities often have lower IC rates because they receive significant subsidies and funding from their respective state governments, which helps cover some of their overhead costs.
Yes. Universities are the second leading sponsor of academic research and development (R&D). Federal data show that colleges and universities pay for more than 24 percent of total academic R&D funding from their own funds. These institutional commitments to academic R&D significantly exceed the combined total of all other non-federal sources of support for academic R&D: state and local government, industry, and foundation.
No. Lehigh absolutely does not make gains from our F&A recoveries. As stated above, we are not fully reimbursed for the expenses incurred to provide the necessary infrastructure and support to conduct research.
No. OMB rules (2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards) require that F&A cost reimbursements can only be based on federally funded research space and related research activities, not other university facilities or activities.
F&A rates are determined through a standardized negotiation process with federal agencies, ensuring that they are fair and reflective of the institution's actual costs. As such, funding agencies are accustomed to varying F&A rates and understand that these rates reflect the necessary support services required to conduct high-quality research.
Further, higher F&A rates are often indicative of a robust research infrastructure. Universities with higher rates typically offer higher quality or more specialized facilities, comprehensive administrative support, and extensive compliance services. These resources can significantly enhance the quality and impact of the research conducted, making the overall proposal more attractive to funding agencies.
In summary, F&A rates are an integral part of the research funding ecosystem. They ensure that the necessary infrastructure and support systems are in place to facilitate high-quality research.
General Questions on the application of F&A rates
In the case of a sponsor (foundation, state, or some federal programs) with a published or otherwise well-documented policy on reduced F&A, the university will accept the lower rate. Written documentation of the sponsor’s rate restrictions must be provided when the proposal is initiated in LIRA.
It is Lehigh’s policy to recover the full F&A costs on projects funded by for-profit or industry sponsors. In accordance with the policy, reductions in F&A for projects funded by for-profit organizations will be granted only in extraordinary circumstances.
Please review the F&A Application policy for further information and the process for requesting an exception.
It is important to note that the responsibility for demonstrating that the off-campus rate is appropriate rests with the Principal Investigator. Determination of whether a project is “on-campus” or “off-campus” requires identifying if the proposed effort of Lehigh personnel working off-campus is greater than the proposed effort of those working on-campus.
ORSP’s “Determination of dominant locale of research” tool should be used and uploaded into the LIRA proposal record while the budget is being developed.