New F&A rates for FY2023 and FY2024

Dear Colleagues,

MIT recently concluded negotiations with the Office of Naval Research (ONR) for facilities and administrative (F&A) rates for fiscal years 2023 and 2024. Under the agreement with ONR, which negotiates with MIT on behalf of all U.S. federal funding agencies, MIT’s F&A rates are increasing from 55.1% to 59.0% for on-campus research and from 5.8% to 6.2% for off-campus research (including Lincoln Laboratory and Haystack Observatory).

These new rates take effect retroactively from July 1, 2022, and will remain in place through the end of fiscal year 2024. As always, the new rates are applicable to future federal research awards and existing and future non-federal research awards. Existing federal research awards continue to be assessed the F&A rate in effect at the time they were received.

Rates are rising because several years ago, MIT was in the position of having over-recovered F&A costs from the federal government. This can occur when a university’s actual research costs are lower than they were projected to be when the F&A rates were negotiated, for example. As a result, in the last few fiscal years, our F&A rates were artificially suppressed in order to pay back the over-recovery. The new F&A rates represent a return to levels that more accurately reflect MIT’s actual costs to support research, including significant new investment in modernizing our facilities.

Another factor has put upward pressure on F&A rates:  During the pandemic we saw a decline in total sponsored research at MIT, meaning we have had to allocate indirect costs across a reduced base of sponsored research.

We understand the impacts of higher F&A rates on MIT research programs and have worked to find other ways to reduce the total costs of research awards by lowering employee benefits rates and increasing the centrally provided graduate research assistant tuition subsidy rate. And in the 2020–21 academic year, MIT did not raise tuition, one effect of which is to provide recurring cost savings to grants.

It is important to note that if inflationary forces persist and the research base does not grow, these factors will continue to put pressure on F&A rates.  While we will do everything possible to minimize increases, you should keep this possibility in mind as you plan for the funding needs for your research program.

If you have any questions about the new F&A rates, please reach out to your representative in Research Administration Services.

Thank you.

Sincerely,

Cynthia Barnhart, Provost

Glen Shor, Executive Vice President and Treasurer

Maria T. Zuber, Vice President for Research