Concerns about indirect cost rates and research overhead recently prompted a meeting of the House Science Committee. The issue has taken on new importance in light of the major cuts the Trump administration has proposed to National Institute of Health (NIH) indirect cost payments, previously reported in GrantWeek. While no particular legislation has been proposed regarding this issue outside of the President’s budget request, legislators of both parties seemed interested in gathering more information on the topic.

Only one of the four witnesses argued against current overhead procedures, with Richard Vedder, a retired economics professor and director of the Center for College Affordability and Productivity, claiming that overhead funding exacerbates the division between wealthy and cash-strapped institutions, and that Congress should consider a capped reimbursement rate, as well as preferential treatment for applicants offering lower rates.

Two of the other witnesses spoke about the financial constraints faced by universities, and how they justify current overhead rates. William Bell, director of the National Science Foundation’s (NSF) Division of Institution and Award Support, stated that universities lose more money than they recoup through federal grant funding, and that one must take into account that negotiated reimbursement rates vary based on the kinds of research an institution conducts, their geographic location, and differences in the rules governing reimbursement.

James Luther, Duke University’s associate vice president of finance and chairman of the board for the Council on Governmental Relations, a research university association, warned that any reduction in federal overhead would fall hardest on smaller institutions, with fewer resources to bear the blow. Luther testified that universities often run up against federal limits capping administrative costs to 26 percent of a grant’s direct costs, and that any new regulation must come from the university’s own coffers.

The fourth witness, John Neumann of the Government Accountability Office, discussed a new report his agency was working on, tracking indirect costs funded by NSF. While Neumann could state that indirect costs rates have increased as a percentage of all NSF research funding, their report had not yet identified specific causes for the increase.

While no formal policy recommendations have yet come from this hearing, Research & Technology Subcommittee Chair Barbara Comstock (R-VA) and ranking member, Rep. Dan Lipinski (D-IL), expressed an interest in lowering the amount needed for indirect cost rates by streamlining the administrative process and reducing cost of regulations. The Science Committee’s ranking member, Eddie Bernice Johnson (D-TX) wrote a strongly worded statement saying that in light of reduced state support for universities, reductions in overhead payments “would do immediate and lasting damage to the research programs at our nation’s great public institutions.” To access the recorded hearing, and written statements, click here.