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This past spring, the Trump administration's fiscal year 2018 budget had little good news for the nation's biomedical research enterprise. Prominent among areas targeted for deep cuts, the National Institutes of Health (NIH) faced a threatened 22% reduction in its funding-$7.7 billion less in appropriations than the previous year.
Such a draconian action was dismissed upon arrival on Capitol Hill, and steps were taken to shore up overall NIH funding. But buried within the administration's accompanying budget documents, and receiving far less attention, was a seemingly arcane change in the way NIH supports extramural research, by capping grant funding for indirect costs-also known as facilities and administrative (F&A) costs-at 10% of total research costs.
Longtime supporters of biomedical research in the House and Senate understood the significance of the proposed cap and acted quickly to try to block it. A temporary measure to block the cap was enacted in September and may be extended for the balance of this fiscal year. 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.
The sheer magnitude of the research funds at stake under the proposed 10% cap underscores the consequential nature of the issue and signals a misunderstanding of the ways in which indirect costs are essential to the conduct of biomedical research. 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. 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.
Here I explore the history, rationale, and criticism of the recovery of indirect costs. I focus on NIH funding because the Trump administration targeted that agency in its proposal. Yet, I recognize that similar effects could be felt across multiple federal granting agencies, such as the National Science Foundation (NSF) and Department of Energy, that rely on NIH-approved rates in funding comparable research. I find that the indirect...