What about A-122?  Also, I have had A-133 audits where it was required we
change the rate in the middle of the project year due to a lower
(provisional) rate being awarded (e.g. grant awarded at 50%, which was the
rate in effect at the time of issue, but negotiated rate with DHHS awarded
later at 45.3%). What option applies?

-----Original Message-----
From: Terry Edwards [mailto:xxxxxx@OCEAN.OTR.USM.EDU]
Sent: Wednesday, November 11, 1998 11:49 AM
To: xxxxxx@hrinet.org
Subject: Re: A-21 &F&A rates for the life of the spon ag

Martha Taylor wrote:

  Dear RESADM-L-ers:

  We have a small difference of opinion here today about A-21 and the

  requirements in section G.7. about fixed F&A rates for the life of a

  sponsored agreement.  I would like to survey the group and ask for a

  response to the following multiple choice question.  How do you handle the

  requirements in G.7. when your rate changes?  (choose one)

It seems clear to me but I felt a need to ask the experts.  Thanks.

I choose:  F.  All of the above.

A.  We leave the rate exactly the way it was at the time the award was

signed and became effective.

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.

B.  We change the rate down whenever a new lower rate becomes effective 

regardless of what the regulations say or the budget will support.

If negotiated rate agreements do not extend through the life of the
sponsored agreement at the time of the initial award, then the negotiated
rate for the last year of the sponsored agreement shall be extended through
the end of the life of the sponsored agreement.

C. If we know in advance of award acceptance that our rate will change on a 

date certain, we negotiate the changes when we negotiate the award and then 

change the rate when the rate becomes effective.

When an educational institution does not have a negotiated rate with the
Federal Government at the time of the award (because the educational
institution is a new grantee or the parties cannot reach agreement on a
rate), the provisional rate used at the time of the award shall be adjusted
once a rate is negotiated and approved by the cognizant agency.

D.  We leave the rate exactly as it was proposed and awarded for all years

until we have to resubmit a competing continuation/renewal proposal.

"Life" for the purpose of this subsection means each competitive segment of
a project. A competitive segment is a period of years approved by the
Federal funding agency at the time of the award.

E.  Other: Use your best judgement (please provide brief explanation)

Negotiation of predetermined rates for F&A costs for a period of two to four
years should be the  norm in those situations where the cost experience and
other pertinent facts available are deemed sufficient to enable the parties
involved to reach an informed judgment as to the probable level of F&A costs
during the ensuing accounting periods.
 
 

Most important thing to remember is: GET IT IN WRITING upfront.

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.
&
Award levels for sponsored agreements may not be adjusted in future years as
a result of changes in negotiated rates.
 

CIRCULAR A-21 (REVISED 10/27/98)
Section G.  Determination and application of F&A cost rate or rates.
Paragraph 4.  4. Predetermined rates for F&A costs.
Public Law 87-638 (76 Stat. 437) authorizes the use of predetermined rates
in determining the  "indirect costs" (F&A costs in this Circular) applicable
under research agreements with educational institutions. The stated
objectives of the law are to simplify the administration of cost-type
research and development contracts (including grants) with educational
institutions, to facilitate the preparation of their budgets, and to permit
more expeditious closeout of such  contracts when the work is completed. In
view of the potential advantages offered by this procedure, negotiation of
predetermined rates for F&A costs for a period of two to four years should
be the norm in those situations where the cost experience and other
pertinent facts available are deemed sufficient to enable the parties
involved to reach an informed judgment as to the probable level of F&A costs
during the ensuing accounting periods.

Paragraph 7. Fixed rates for the life of the sponsored agreement.

     a. 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. "Life" for the purpose of this subsection means each competitive
segment of a project. A competitive segment is a period of years approved by
the Federal funding agency at the time of the award. If negotiated rate
agreements do not extend through the life of the sponsored agreement at the
time of the initial award, then the negotiated rate for the last year of the
sponsored agreement shall be extended through the end of the life of the
sponsored agreement. Award levels for sponsored agreements may not be
adjusted in future years as a result of changes in negotiated rates.

     b. When an educational institution does not have a negotiated rate with
the Federal Government at the time of the award (because the educational
institution is a new grantee or the parties cannot reach agreement on a
rate), the provisional rate used at the time of the award shall be adjusted
once a rate is negotiated and approved by the cognizant agency.