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AAU Letter to NSF Director on Cost-Sharing Policies
July 3, 2002
Dr. Rita Colwell Dear Rita, AAU member institutions value the long-standing partnership between research universities and the federal government. This partnership has produced tremendous benefits for the American public. It has resulted in the generation of new knowledge and discoveries that have improved the public health, raised Americans' standard of living, and created jobs. An important aspect of the partnership is the shared responsibility for supporting the costs of university infrastructure associated with federally sponsored research. The process established to allocate these costs fairly is the facilities and administrative (F&A) rate mechanism. When universities do not recover from the federal sponsor a fair share of F&A expenses attributable to the research, they must pay for them by taking resources away from other research and education obligations. The RAND study entitled "Paying for University Research Facilities and Administration," released in the spring of 2000, showed that based upon negotiated rates, universities recover only between 70 to 90 percent of the facilities and administrative costs associated with federally sponsored research. A recent analysis by the Council on Governmental Relations (COGR) showed that this under-recovery results from a mix of OMB policies (including the arbitrary 26 percent cap on recovery of administrative costs) and several different agency practices. NSF was identified by the COGR study as the agency responsible for roughly 17 percent of total underrecovery of facilities and administrative costs in the sample of 18 participating research universities. The COGR analysis identified cost-sharing on NSF awards as the reason for the underrecovery. The university community appreciates the NSF policy issued in May, 1999 that said, "NSF cost sharing requirements beyond the statutory requirement (of one percent) will be clearly stated in the program announcement… NSF-required cost sharing is considered an eligibility rather than review criterion." We have hoped that this policy will take care of NSF's large contribution to under-recovery, but have continued to hear anecdotal reports that NSF program officers are pressing grantees to accept a higher level of cost-sharing as a condition of winning an award. The AAU Costs of Research Committee has asked that I bring this matter to your attention. Now that the May, 1999 policy has been in effect for three years, we would appreciate your reviewing its implementation, and both formal and informal cost sharing at NSF, especially with an eye to compliance by project officers in all of NSF's divisions. We look forward to continuing to work together on research in service to the nation, and to ensuring that universities recover the documented, audited costs incurred by universities in performing this research. Thank you for your attention to this matter. Cordially,
Nils Hasselmo NH/GLL/law
cc: Dr. Warren M. Washington, Chair, National Science Board
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