U-M's Facilities & Administrative (F&A) Rates and Indirect Cost (IDC) Policies

Full recovery of indirect costs (IDC or F&A costs) is expected on all grants/contracts whenever possible.

Please reference ORSP's Standard Operating Procedure (SOP) on indirect cost policy and Finance Sponsored Program's Policy On Indirect Cost Recovery Excluded (ICRX) Expenditures (U-M Finance).

When full recovery is not possible, policies and procedures for waiving full recovery of indirect costs will be enforced at the level of U-M's schools, colleges, institutes, and centers (as well as the Flint and Dearborn campuses).

Requests for waivers must be submitted and reviewed by the relevant school/college/institute/center's requirements.

ORSP delegates responsibility for:

• Establishing criteria for when a sponsor-capped F&A rate will be accepted.
• Establishing criteria for what constitutes an F&A waiver.
• Determining how F&A waiver requests should be submitted and reviewed.
• Determining who is authorized to approve F&A waiver requests.
• Documenting whether an F&A waiver request has been approved.

ORSP will not assess whether the F&A rate used on a PAF is a waiver; nor will it require documentation that an IDC waiver has been approved. Instead, ORSP will consider approval of the PAF to be evidence of school/college/institute/center approval of the F&A rate, regardless of what rate is used.

At U-M, all proposals to non-profit sponsors should use the same indirect cost rate used for federal and industry sponsors. 

If the University agrees to cost-share a portion of the direct costs of a project, the indirect costs associated with those direct costs may also be used for cost sharing (with prior approval in the case of federal funds). If the sponsor limits indirect costs, the difference between the full recovery of indirect cost and what is allowed by the sponsor may be shown as a University cost-sharing contribution.

MTDC: The indirect cost rates for federal projects are applied to a modified total direct cost (MTDC) base. The rates apply to all direct costs with the exception of the following:

1. Equipment with a unit value of $5,000 or more and a life expectancy of one year or greater. (Nonexpendable items valued at less than $5,000 or with less than a one-year life expectancy should be budgeted as materials and supplies.)
2. Capital expenditures.
3. Participant support costs.
4. Charges for patient care.
5. The amount of each subcontract or subgrant exceeding $25,000.
6. Rental costs for off-site facilities.
7. Student tuition remission, scholarships, and fellowships.

TDC: The indirect cost rates for most non-federal projects, not at full indirect cost recovery, are applied to a total direct cost (TDC) base. The rates apply to all direct costs.

1. For federally-sponsored clinical trial site activity, use the OSA rate based on modified total direct costs (MTDC).
2. For industry-sponsored clinical trial site activity, use the OSA rate based on the total direct costs (TDC).

The University does not apply or recover a Specialized Service Facility Fee (SSFEIDC) nor a Quality Assurance Fee (QAF) related to animal charges on sponsored projects (funds 20000, 25000). All animal purchase and housing for all external sponsors are treated as any other supply or service cost with no change to the Indirect Cost Recovery.

The QAF at 20% will be applied to all animal charges on non-sponsored projects (funds 10000, 30000, 40000, 54010) within the Medical School.

Projects with the State of Michigan vary  widely, depending on the specifics of individual projects. Contact your school/college/institute/center administration for assistance with State of Michigan indirect cost rates.