Facilities and administrative (formerly known as indirect) cost rates applicable to sponsored research and service should be negotiated by the Office of the Controller with the university's cognizant federal agency pursuant to Office Management and Budget (OMB) Circular A-21, "Cost Principles for Educational Institutions." Appropriate negotiated rates for the type and location of the supported activity should be applied to all sponsored agreements unless an exception is warranted pursuant to Section 5305.3 of this policy. Changes in negotiated rates should be widely disseminated among affected members of the university community, along with the reasons for the changes.

This policy applies to all accounts established after January 1, 1998, for externally funded research and service projects. This policy does not apply to gifts or charitable grants or to awards solely for student aid, including student internships. In addition, this policy does not apply to restricted accounts used to hold royalties or other forms of income generated from the commercialization of university-owned technology.

In keeping with the university's status as a publicly funded, metropolitan institution, whose goals include the stimulation of regional economic development, the following exceptions are authorized:

1. For sponsors that have published policies limiting the amount or rate of facilites and administrative costs, the published rate or amount shall apply.
2. In the absence of a published agency policy, grants and contracts with local governmental units in the state of Ohio and Ohio-based nonprofit organizations shall be charged no less than 15 percent of modified total direct costs.
3. For contracts with Ohio-based industries, the rate shall be no less than 15 percent of modified total direct costs unless the funds are federal flow-through, in which case the university's applicable negotiated rate shall apply. However, if the federal flow-through is from a Phase I Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) award to an Ohio-based company, the 15 percent rate may apply.
4. For joint Veterans Administration/Wright State University studies, the rate shall be no less than 10 percent of modified total direct costs.
5. For awards under the Department of Defense (Research Initiation) Summer Research Extension Program, the rate shall be no less than 15 percent of modified total direct costs.

In all of the above cases, the difference between the rate or amount allowed and the negotiated rate or amount shall be cost shared by the university.