New USDA-NIFA Indirect Cost Policy

The U.S. Department of Agriculture (USDA) has recently changed how limitations on Facilities and Administrative Costs (F&A) are determined in proposals with subawards.

The new language has resulted in a change to how ASU must determine the maximum F&A allowed on new USDA National Institute of Food and Agriculture (NIFA) proposals.

There may be a minor reduction in F&A recovery on some proposals, as compared to the old method.

NIFA’s new indirect cost rate guidelines state:

“Section 1462(a) and (c) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (NARETPA) limits indirect costs for the overall award to 30 percent of Total Federal Funds Awarded (TFFA) under a research, education, or extension grant. The maximum indirect cost rate allowed under the award is determined by calculating the amount of indirect costs using:

  1. the sum of an institution’s negotiated indirect cost rate and the indirect cost rate charged by sub-awardees, if any; or
  2. 30 percent of TFFA.”

In short, the total F&A requested (ASU’s F&A + all subaward F&A) must be less than 30% of total funds requested.

What does this mean for proposal budget preparation?

This means that it has become even more important to:

  1. Give any subawards on your NIFA proposal a budget cap early in the process that includes F&A. This way we know early on the maximum F&A to expect from each.
  2. Require subs to limit their F&A to either 30% of their request or their negotiated rate, whichever is lower.
  3. Get final budgets from subawards well before the proposal due date. All F&A will then need to be totaled. If using our negotiated rate leads to exceeding 30% TFFA, the RA will reduce our F&A amount (as lead), by decreasing the F&A rate or rebudgeting between F&A bearing and non-F&A bearing costs, as appropriate for the project.

It is always recommended to start the process with subaward institutions early.

Your Proposal GCO will help to ensure that F&A does not exceed the required cap, as long as sufficient time is provided for PNT review.

What does this mean for management of NIFA awards?

Existing/Old Awards

The updated indirect cost cap does not apply to NIFA awards made prior to December 21, 2018, including continuation and renewal awards (same grant number and scope of work) that are modified to add funding or to extend the period of performance. The same requirements associated with these original awards will continue to be applicable.

New Awards

For new awards, the Notice of Award (NOA) will likely include the new indirect cost cap. The overall budget will need to be assessed and monitored to ensure that ALL F&A (ASU’s F&A + subaward F&A) stays under 30% of Total Federal Funds Awarded (TFFA).

The Agriculture Improvement Act of 2018 (The Farm Bill)

NIFA Indirect Cost Chart

FAQs related to maximum indirect cost cap of 30% of total federal funds awarded