Budget Components

Per 2 CFR §200.412 there are two primary components that make up a budget: Direct Costs and Indirect Costs. The total cost of federally sponsored research includes a combination of both, direct and facilities and administrative (F&A) costs.  Both types of expenditures are key to UNM’s ability to conduct cutting-edge research.

Direct Costs

A Direct Cost is any cost that can be specifically identified with a particular project, program, or activity and that is charged directly to an award. Direct Costs include, but are not limited to:

  • Salary and Fringe Benefits
  • Tuition
  • Equipment
  • Subawards
  • Travel
  • Participant Costs
  • Participant Incentives
  • Materials and Supplies
  • Publication Costs
  • Consultants

While these are all Direct Costs, some of these items are also considered Modified Costs, which are explained in detail below.

Indirect Costs - Facilities & Administrative (F&A) Costs

Indirect Costs are those incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular project or activity. Examples of Indirect Cost would be the administration of payroll and benefits, building utility and maintenance costs and safety, security and other government-mandated expenses. Indirect Costs are "reimbursements" to UNM. UNM incurs very real expenses associated with being able to support sponsored projects and Indirect Costs are meant to reimburse these expenses. Various grant makers and sponsors use the following terms interchangeable, to mean Indirect Costs: Facilities & Administrative Costs and Overhead.

UNM must follow its federally negotiated rates when applicable. UNM currently has federal negotiated rates as well as non-federal New Mexico public sponsor rates.

The UNM Federally Negotiated Rate Agreement contains the following rates:

    • Organized Research - Includes, sponsored research and University research. Activities include research training and development.
    • Instruction - This includes teaching and training activities (this excludes research training). Some examples would be: Curriculum development projects, projects involving UNM students who receive academic credit, general support for writing instructional materials.
    • Other Sponsored Programs - Projects that are not instruction or organized research. Examples include health service projects and community service program, providing technical assistance, or organizing and conducting workshops that involve the community.
    • Off-Campus - Research that is conducted in facilities that are not owned by UNM and otherwise paid for by UNM. Use of off-campus rates requires prior approval from OSP. The exception request process can be found here.
    • Research DOD Contracts - DoD project that is awarded as a contract
    • Off-Campus Research DoD Contract - DoD project that is awarded as a contract and taking place off-campus.
    • Intergovernmental Personnel Act (IPA)

*If the sponsor is non-federal and it is not listed under the NM Public Sponsor rate agreement, please review the OSP Guidance to obtain applicable F&A rate on proposals to non-federal sponsors

Applicability of a Reduced F&A Rate

If an F&A rate is less than the standard rate per the UNM Federally Negotiated Rate Agreement, Indirect Costs are charged to Total Direct Costs (TDC). This must be consistently applied, unless otherwise prohibited by the sponsor in a published solicitation or sponsor policy.

The following are examples of how this will apply:

  • As noted on the New Mexico Public Sponsor memo, when applying a reduced rate of 20%, F&A is calculated on TDCs

Click here for more information on Indirect Cost recovery

Modified Direct Costs

Per the UNM Federally Negotiated Rate Agreement, Modified Direct Costs consist of all direct salaries, wages, fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward. The following are EXCLUDED from the Modified Total Direct costs:

  • Tuition
  • Scholarships and Fellowships
  • Rental Costs - Rental agreement needs to be provided to OSP prior to proposal submission. Off Campus Rate would apply in this instance. Prior is needed.
  • Equipment - Must have a unit cost greater than $5,000. A quote is required for all proposed equipment in a budget and it must be submitted to OSP along with the Streamlyne proposal record. 
    Fabricated Equipment- When the project is complete, all of the components must be permanently and intrinsically attached to each other to result in one standalone capital equipment item.
  • Capital Expenditures
  • Subawards - F&A is charged on the first $25,000 of each subaward. The remaining amount would count towards the total modified direct costs
  • Participant Costs - please note the difference between Participant Support vs. Participant Incentives. Click here for more information on Participant Support


For questions regarding indirect rates on non-competitive agreements, please contact ospappointment@unm.edu