How are F&A cost rates negotiated?
ASU submits a formal F&A cost rate proposal to our cognizant federal agency, the Department of Health and Human Services (DHHS). The proposal is based on the most recent fiscal year for which complete cost data is available and is evaluated by DHHS negotiators who represent all federal agencies. The negotiators’ role is to determine if ASU has accurately identified its F&A costs and allocated these costs in accordance with the prescribed methods. There are usually some differences in the interpretation of the rate proposal processes which lead to compromises between federal negotiators and university officials in arriving at a final rate agreement. Once this negotiation is concluded, the F&A rate agreement is signed by both DHHS and ASU. Federal negotiators prefer to negotiate rate agreements for multiple years. This type of negotiated rate settlement provides a greater degree of assurance for both the government and university as to the general level of future F&A funding that can be
