The following is a joint statement from the Association of American Universities (AAU), Association of Public and Land-grant Universities (APLU), Association of American Medical Colleges (AAMC), American Council on Education (ACE), Association of Independent Research Institutes (AIRI), Council on Governmental Relations (COGR), National Association of Independent Colleges and Universities (NAICU), American Association of State Colleges and Universities (AASCU), Science Philanthropy Alliance (SPA), and the National Association of College and University Business Officers (NACUBO).
Today, the Joint Associations Group (JAG) on Indirect Costs released its recommendation to Congress and the executive branch for a new model to replace the current facilities and administrative (F&A) cost structure that the federal government uses to fund the indirect expenses that universities and other research organizations incur when conducting federally funded research on behalf of the American people.
Indirect costs are the essential institutional costs associated with conducting sponsored research. Examples include building and facility maintenance; supporting the preparation, submission, and financial management of grant proposals and awards; funding for human resources, payroll, acquisition, and essential utilities and space upkeep; secure data storage and high-speed data processing; complying with multiple federal research security, human subject protections, environmental health, and safety requirements; and much more. Indirect costs do not include other institutional activities unrelated to research, such as education, training, athletics, and more.
The federal government funds indirect costs so universities and other research institutions can provide scientists and researchers with the resources and support they need to drive breakthroughs in science, technology, and medicine – advancements that keep our nation globally competitive, economically strong, and that improve the lives of all Americans.
While the current system for reimbursing indirect costs has served the nation’s research objectives well for decades, it is difficult for taxpayers to understand and can be made more efficient. Members of Congress have called for a new approach, and the JAG has now delivered a comprehensive model that is simple, more easily explained, and enhances transparency and efficiency.
The JAG, a group representing a wide variety of colleges, universities, medical schools, hospitals and medical centers, and independent research institutions, launched the effort in April to explore alternative indirect costs models, assembling a team of subject matter experts (SME) with extensive experience in both direct and indirect costs. These experts conducted a thorough evaluation of the existing indirect costs framework and assessed potential alternatives.
Since April, the JAG has hosted four “town hall” webinars, each drawing roughly 2,000 participants from across the higher education and independent research communities. These sessions outlined the JAG process for developing a new model, introduced two provisional models, and invited feedback from the research community to help inform the final recommendation.
Informed by robust feedback from the community, the final Financial Accountability in Research (FAIR) model incorporates elements of the two provisional models and effectively accommodates the differing operational and research support needs, and the wide array of other characteristics, of institutions that conduct research on behalf of the federal government.
Foundational elements of the FAIR model include:
- Reducing confusion and misunderstanding: FAIR employs a total-project-costs calculation to determine indirect costs; this is designed to reduce confusion as to what percentage of an award goes to indirect costs. This approach offers a simpler, more intuitive understanding of how costs are calculated.
- Promoting transparency: FAIR provides greater accountability and transparency to the American taxpayer, to researchers, to administrators, and to the federal government about the true costs of federally sponsored research. To this end, the new model requires greater accountability from universities to demonstrate that funds provided for essential institutional research support are being spent appropriately. Further, rather than treating every project the same irrespective of scope or discipline as in the current F&A structure, the new model specifically accounts for such differences, providing a common-sense approach to allocation of interest costs.
- Greater efficiency: The new system eliminates the intensive process of negotiating university-wide indirect cost rates with specific federal oversight and accounting offices within the Office of Naval Research and the Department of Health and Human Services. This saves time and money while reducing confusion about how indirect cost rates are determined, why they differ from one institution to the next, and how they translate to the actual dollar amount of total grant funding devoted to indirect costs.
“Although no model for recovering indirect costs is perfect, I believe we have arrived at the best solution for helping maintain American global leadership in research and innovation, keeping our research enterprise strong across all types and sizes of institutions, and providing greater accountability to the American taxpayer,” said former White House Office of Science and Technology Policy Director Kelvin Droegemeier, who helped lead both the JAG effort and the team of subject-matter experts who helped propose the FAIR model. “We owe a debt of gratitude to the many talented individuals who put their personal and professional lives on hold and worked under extreme time pressure to develop the FAIR Model. The national research community provided hundreds of helpful suggestions and analyses that guided our work, and we were blessed to have a supportive, productive collaboration with our government colleagues.”
With the recommendation now finalized, the JAG will host a town hall webinar on Tuesday, July 15 to present the FAIR JAG Model to the research community. The JAG is committed to working with Congress and the executive branch to advance a fair, bipartisan model for indirect costs that strengthens U.S global leadership in research, innovation, and education for generations to come.
Additional information about the JAG and the subject matter experts team as well as prior statements and recordings of webinars is available here; materials on the FAIR model are also available.