Ms. Crea,

This is an interesting development. And, I am assuming that this is a CDC Research grant/contract (i.e., not an Instruction one -- since these are awarded at 8%) and also that CDC does not have some legislatively mandated limit on the F&A rate permissible on these type awards.

1) Although not exactly parallel, a similar condition arose during 10/2003. To their credit, COGR staff were able to resolve that adverse condition via a Memo from the NIH, Director, OPERA

2) I attach the Memo here

3) Please note the references to A-110, 45CFR74, NIH GPS and so forth; and, although not exactly the same as you CDC grant below, I believe the same federal costing principles would apply in terms of imposing "a fixed percentage for F&A costs without regard for the negotiated F&A rate"

4) I would recommend that you forward your case to COGR staff (Tony DeCrappeo), who really deserves the credit for the wonderful work during the 10/2003 cases

5) Also, I will check with our local grant administrators for any such CDC Research grants/contracts with a lower mandated 10% F&A rate

6) These conditions always worry me since A-21 (section B1b) demands that ALL Research must go into the "base" (denominator) for F&A Rate calculations which of course tends to lower proposed/negotiated F&A rates, but then the Awards are issued at rates much lower than federally-negotiated F&A rates
http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html

7) That said, some federal Research awards do have legislatively mandated lower F&A Rates (e.g., USDA), so there is not much we do about these (except to petition the specific agency for more equity)

I hope that my response is of some benefit.

Regards,
Steve

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CREA CATHARINE wrote:

Is it allowable for a federal agency to award indirect costs at a rate lower than an institution’s negotiated rate?

We have received an award notice from CDC for the second year of a four year project. Direct costs are as requested, but F & A is far lower than it should be (10% rather than 55%). The notice of award says, “Indirect costs have adjusted to remain within the total approved funding level …” The notice confirms that funds may be redirected to direct costs, but goes on as follows: “NOTE: A change in the scope of approved activities may not result from a redirect of funds without approval from the Grants Management officer (GMO). Clearly, the scope will be affected if direct costs are significantly reduced.

Is this legal? Can they do this?

OMB A21 says “Federal agencies shall use the negotiated rates for F & A costs in effect at the time of the initial award throughout the life of the sponsored agreement.”

Is there another reference I can point to?

Any information or advice will be much appreciated.

Catharine Crea

Associate Dean for Research Administration

New York Medical College

Valhalla, New York 10595

(914) 594-4480 phone

(914) 594-4694 fax

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============
Steve Bradley
Asst. Dir., F&A Costs/Effort
Univ. of Minnesota
200 Oak St. SE
Suite 450
Minneapolis, MN 55455
PH 612-626-9895
FX 612-624-4843
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