WASHINGTON, DC - In an effort to improve the value of federal research dollars, the nonpartisan Government Accountability Office (GAO) today issued a report making 12 recommendations for agencies involved in the indirect cost rate-setting process. When the National Institutes of Health (NIH) provides federal funding to non-federal researchers, an indirect cost rate is proposed, which does not go to pay for research, but for indirect costs such as electricity, heating, cooling, water, or other administrative expenses. The designated agencies that approve cost rates then review to ensure they are compliant. In 2015, NIH spent over $23 billion to support non-federal research, including $6.3 billion for indirect costs - a little over 25 cents for every dollar. The recommendations seek to extend the value of scarce federal research dollars.
Currently, three agencies are involved in setting indirect cost rates for federal financial assistance funded by NIH. Those agencies are: HHS’ Cost Allocation Services, NIH’s Division of Financial Advisory Services, and the DoD’s Office of Naval Research. In its report, the watchdog summarized, “GAO found that while the three agencies had designated controls for setting indirect cost rates, deficiencies in the design of some of these controls could result in the waste of federal resources."
“A little over 25 cents of every NIH dollar designated for outside research is spent on indirect costs - and this report offers a dozen recommendations to improve controls and oversight to try to get more bang for every buck," said full committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA). “The lack of detailed instructions and guidance by all three agencies is cause for concern and has been problematic for colleges and universities across the country. Without taking action and improving oversight and controls, these indirect costs continue to have the potential to detract from groundbreaking research. Research dollars should go directly as intended - to the research, and with GAO’s thorough recommendations, there is clearly an opportunity to do better."
