Office of
Sponsored Programs

DoD 35% F&A Cap

GENERAL

Purpose

The following Process is established to ensure compliance with all federal and sponsor requirements regarding the 35% F&A cap imposed by the Department of Defense (DoD).  This SHARP describes the shared process to be followed by OSP and a PI in the matter of identifying and managing the 35% F&A cap on DoD sponsored project accounts.

Administration

The Office of Sponsored Programs is responsible for maintenance and review of this SHARP. 

BACKGROUND INFORMATION

FY2008 Department of Defense (DoD) Appropriations Bill, Section 8115.

"Notwithstanding any other provision of law, none of the funds made available in this Act may be used to pay negotiated indirect cost rates on a contract, grant, or cooperative agreement (or similar arrangement) entered into by the Department of Defense and an entity in excess of 35 percent of the total cost (direct and F&A) of the contract, grant, or agreement (or similar arrangement): Provided, that this limitation shall apply only to contracts, grants, or cooperative agreements entered into after the date of the enactment of this Act using funds made available in this Act for fiscal year 2008 for basic research.

The bill was signed by the President on November 13, 2007, and is now law.

PROCESS

Implications for SIT sponsored projects are as follows:

GENERAL

  • Applies only to basic research, i.e., 6.1 funds.  Awards made from DoD budget activities 6.2 (applied research) and 6.3 (development) are not affected
  • Awards affected are contracts, grants or cooperative agreements for basic research funded on or after November 17, 2007; it does not apply to continuation funding added to awards made prior to the FY08 allocation

OSP

  • Cap applies only to prime awards; it does not flow down to subrecipients
  • At the proposal stage, budgets should be developed using our federally negotiated rates in effect at that time
  • Determine at the time of an award, by means of the award language (terms and conditions) if the project is being funded by DoD from 6.1 funds.  It is important to note that it is often not known, or not obvious, at the time the proposal is prepared and submitted, from which source of DoD funds the project will be funded
  • At the time of an award, sponsors may ask us to provide a revised budget that reflects the cap.  In situations where a revised budget is not requested, Stevens is still responsible for managing the cap
  • SRA will include a statement that the cap is applicable to the award, if appropriate
  • The effective F&A rate for budgets where no direct costs are excluded from the application of F&A and the actual work is being done entirely on the Stevens' campus is 53.85%.  If the approved F&A rate at the time of the award is higher than 53.85%, then the F&A rate must be maintained at 53.85%.  If the budget contains direct costs that are normally excluded from F&A, i.e., subawards, equipment, tuition, etc., then calculation must be performed to determine if the full rate can be applied

PI

  • Prepare all proposal budgets submitted to DoD agencies, or where DoD is the prime sponsor, with the full F&A rate in effect at the time the proposal is prepared.  It is important to note that it is often not known, or not obvious, at the time the proposal is prepared and submitted, from which source of DoD funds the project will be funded.  Additionally, THE PI DOES NOT MAKE THE DETERMINATION THAT THE PROJECT IS BASIC, APPLIED OR DEVELOPMENT, the sponsor does that and funds accordingly.
  • The effective F&A rate for budgets where no direct costs are excluded from the application of F&A and the actual work is being done entirely on the Stevens' campus is 53.85%.  If the approved F&A rate at the time of the award is higher than 53.85%, then the F&A rate must be maintained at 53.85%.  If the budget contains direct costs that are normally excluded from F&A, i.e., subawards, equipment, tuition, etc., then OSP must do a calculation to determine if the full rate can be applied
  • DoD agencies include:
    • Army
    • Navy
    • Air Force
    • Marines
    • Coast Guard (in war-time)
    • DARPA
    • NSA
    • Missile Defense Agency
    • Defense Intelligence Agency
    • National Geo-spatial Agency
    • Other associated defense agencies