Indirect Cost Rates FAQ's
Frequently Asked Questions
Don’t see your question? Ask your Contract Administrator. Questions for future FAQ’s can be submitted to: oraweb@umd.edu
Proposals
When should we start using the new, FY2027, rate agreement?
You are encouraged to start using the FY2027 rate agreement now and are required to use them for any proposal routed for submission on January 20, 2026 or later for budget periods beginning July 1, 2026.
I have a 3 year budget for a new project, what fiscal year rate should I use?
First you should confirm what type of activity will be performed. Then you should apply the appropriate F&A rate to the costs in the first period that occurs in FY23, and then apply the appropriate stepped F&A rate to all other periods that occur in FY 24-25.
I have a proposal submitted under the old rate agreement that was selected for funding, and a revised budget is needed. What rate agreement will apply?
For your revised budget you should use the rate that was used in your proposal submission.
If funded, will all of my proposals submitted prior to the new rate agreement now be subject to the new rate(s)?
Generally, no. Awards made based on proposals submitted under the old rate agreement will typically follow that agreement until the next competitive cycle or significant modification
What rate agreement should I use for my next renewal or continuation application?
Use the FY2027 rate agreement for any renewal or continuation application routed on or after January 20, 2026.
Awards
I have a contract with an IDC rate of 56% MTDC and subawards with a $25k basis limit. I will be asking for supplemental funds for an additional year starting 7/1/26 or later, what rate should I use?
Supplemental funds, not included in the originally routed proposal, should use the FY2027 applicable rate, including $50k basis limit for new subaward agreements.
Is the IDC rate and basis limit on all of my department’s existing awards and subawards going to be changed to the FY2027 rate agreement?
Existing awards and subawards will typically continue at the rate established at the time of the award.
I have an ongoing incrementally funded project which has subawards. Will the new increment of funding apply to the FY2027 rate agreement with the $50k basis limit?
If the funding and scope of work for the subaward is from the original award, the previous rate agreement will continue to apply for the same competitive segment. In a future competitive segment, the FY2027 rate agreement will apply, including the $50k basis limit applied to subawards included in that segment.
I have a federal grant (or cooperative agreement) with an IDC rate of 56% MTDC and subawards with a $25k basis limit. I will be asking for supplemental funds for an additional year starting 7/1/26 or later, what rate agreement should I use?
Federal grants and cooperative agreements generally follow the rate in effect at the time of the initial award for that competitive segment. New competitive segments should propose and be awarded under the FY2027 rate agreement.
I have a non-federal grant or agreement for research with an IDC rate of 56% MTDC and subawards with a $25k basis limit. I will be asking for supplemental funds for an additional year starting 7/1/26, what rate should I use?
Check the specific terms of the non-federal sponsor; however, new funding periods typically adopt the current institutional rates.
Department of Defense (DoD)
I have a new proposal going to DoD, and the solicitation doesn’t address whether the award will be a grant, contract, or cooperative agreement. What rate should I use?
- Consult with your Contract Administrator to determine the most likely award vehicle and applicable rate. If unable to determine the award vehicle, then first confirm the activity to be performed is for organized research. If yes, the new DoD rate(s) should be used along with this language added to the budget justification: “In accordance with DFARS 231.303 UMD has used its uncapped DoD F&A rate to calculate the budget. Should the DoD agency decide to award a grant or cooperative agreement instead of a contract, UMD will revise its budget to adjust the F&A rate to the capped Organized Research rate in accordance with 2 CFR 200.”
- *If the activity will not be organized research then the appropriate rate(s) for that activity should be used.
I have a new proposal going to DoD and the solicitation specifically states that the award will be a grant or a cooperative agreement. What rate should I use?
Use the rate applicable to federal grants and cooperative agreements.
I have a new proposal going to DoD and the solicitation specifically states that the award will be a grant or a cooperative agreement. What rate should I use?
You should clarify the prime sponsor, as DoD contracts may have specific rate requirements different from other agencies.
I’m submitting a proposal to a company (or another university or other flow through entity) and don’t know if the prime sponsor is a DoD agency or not. What rate should I use?
First confirm the activity to be performed is for organized research If yes, the new DoD rate(s) should be used along with this language added to the budget justification: “Since UMD is uncertain of the prime sponsor, in accordance with DFARS 231.303, UMD has used its uncapped DoD F&A rate to calculate the budget. Should the prime sponsor not be DoD, or the DoD agency decide to award to company (or entity) a grant or cooperative agreement instead of a contract, UMD will revise its budget to adjust the F&A rate to the capped Organized Research rate in accordance with 2 CFR 200.”
*If the activity will not be organized research then the appropriate rate(s) for that activity should be used.
I have a new proposal going to DoD, and there is no solicitation or guidelines available. What rate should I use?
First confirm the activity to be performed is for organized research. If yes, the new DoD rate(s) should be used along with this language added to the budget justification: “In accordance with DFARS 231.303 UMD has used its uncapped DoD F&A rate to calculate the budget. Should the DoD agency decide to award a grant or cooperative agreement instead of a contract, UMD will revise its budget to adjust the F&A rate to the capped Organized Research rate in accordance with 2 CFR 200.”
*If the activity will not be organized research then the appropriate rate(s) for that activity should be used.