When universities, like the University of Arizona, perform research on behalf of the federal government through agency grants, contracts, or other agreements, the University incurs support costs that cannot be charged to grant/contract sources as "direct costs." These costs are called Facilities and Administrative (F&A) costs (also referred to indirect costs).
F&A costs, defined by the Office of Management and Budget Uniform Guidance 2 CFR, Part 200.56 encompass "those costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved."
Such costs are recovered through F&A rates that are developed by Financial Services, with incisive, helpful input from Research Innovation & Impact (RII) and national subject matter experts. After subsequent extensive review by Department of Health and Human Services (DHHS), rates are negotiated and thereafter applied to grants/contracts, resulting in ~$100M of annual F&A recovery. Such recovery provides critically-needed funding for faculty retention, bridge funding, start-up funding, strategic research initiatives, and F&A support services.