Ronald J. Daniels, president of Johns Hopkins University, explored the history and rationale of indirect costs for university research, and addressed criticisms of the reimbursement in this commentary published by Issues in Science and Technology.
Daniels writes that Congress has so far rejected the administration's attempt to cap grant funding for indirect costs - also known as facilities and administrative (F&A) costs - at 10% of total research costs, "But the potential remains for unilateral action by the administration to cap or cut indirect cost recovery over the longer term, and there are discussions in Washington about the parameters of federal funding for university-based biomedical research generally and indirect cost recovery in particular."
"A 10% cap would reduce by almost two-thirds the amount of funding that research university sponsors would receive to offset indirect costs on federal research grants," he wrote. "In the absence of ready sources of alternative revenue to make up this shortfall, such a cut could not help but force universities to contract dramatically the overall level of research activity conducted on our campuses."
Daniels responded to criticisms of indirect costs, and warned that the administration's approach "would result in a staggering blow to the nation’s vital interest."
"Universities would be forced to retrench by downscaling a research enterprise that has been a vital force in advancing discovery and human health," he wrote. "The economic consequences of these cuts would also reverberate across the United States, confined not only to the biomedical and pharmaceutical sectors, but affecting the many upstream and downstream industries that are connected to them, and the jobs and communities they support.
"Simply, the proposal would amount to a deep and inextricable cut to the private-public partnership at the foundation of the nation’s biomedical research enterprise."