Whatever happens with the court case as to NIH’s initial attempt to limit all indirect costs to a flat rate of 15%, virtually no one thinks that indirect cost calculations are going to stay the same going forward.
I've been reading all your posts on Indirect Costs and there are some interesting ideas and insights. I take issue with one of your first sentences "[c]osts are likely too high and are not transparent at all." This seems like a talking point I keep seeing over and over. Based on what I know from 16 years of experience in research administration (full disclosure: I am not an expert in how the indirect sausage is exactly made), it seems that the calculation that goes into indirect rates is fairly precise but very bureaucratic involving the need to hire "consultants". The amount of time we waste on building and space classification (bean counting), for example, is absurd. I do not think that rates are somehow gamed in ways that create largesse, nor in real dollars does it significantly result in unchecked waste. It's not the rates that are exactly problematic as everyone seems to be fixed on.
The real issue here is government regulation - and I say this as a liberal. There are two key things going on here: one, administration of grants has had very little innovation since I started in the late 2000s. Yes, universities have purchased systems that are slightly more efficient at transmitting proposals to agencies, but on the post award side where we spend most of our time, we still manage complicated effort and large budgets on excel spreadsheets. I know there are tech companies that are earnestly trying to solve some of these massive inefficiencies - the computing power and technology are there, but the biggest factor is university adoption of such systems. They don't want a third party to have a connection to their data warehouses for security reasons. This makes the risk assessment and procurement process next to impossible for deploying technology that could drastically reduce complexity and administrative burden.
The second issue is the Federal government. You posted a COGR graph showing the regulatory burden that has exploded since Uniform Guidance went into effect in 2014. In my lived experience I can tell you that my work life has gotten increasingly worse since UG. Anyone that has had to manage a faculty members’ effort over the salary cap on 16 projects knows exactly what I'm talking about. The way grant effort is tracked and reported is insane. Procurement is another area, as is the lack of uniformity in post award actions at the sponsor level from how we request prior approval, the forms we use, the lack of clear guidance, etc, etc.
I think when people bring up efficiency, they are talking about administration, but many don’t understand that administration costs are capped at 26% (and have been since the 90’s). The “Administration” part of F&A is almost never fully recovered by institutions and is often a loss leader, so anything over 26% is really on the university (not taxpayers) and if they were smart and efficient they would get their admin costs closer to 26%. The Facilities part of an F&A rate are really the driver here. Because of this Universities are in some ways incentivized to grow and expand their campus footprint (as also pointed out), but to what extent I'm not sure. So, when people say things like incentivize efficiency, it sounds good, I just don't know how you operationalize that in terms of the actual rate agreement if we're talking about space being the main driver.
The real question I don't think is about indirect costs per se and whether the rates are “too high”- indirects are a laughably small portion of grant costs on a macro level and related to the federal budget. If you do the budget math for NIH, indirects work out to 20% of the proportion, with 80% to directs. I do wonder if we could get to a flat rate or a tiered flat rate that just treats all projects the same and gets rid of MTDC and everything that is administratively burdensome about having to justify rates in the first place. Universities would save loads of time if we stopped accounting for all our space. It would make training grants, for example less of a money pit and ultimately allow everyone to focus on more important things like actually doing and supporting research. Certainly, this could be modeled at a large scale to get an answer on the best approach.
I think we are saying much of the same thing, just slightly different. I would be interested in actual models to show if you could get to a lower effective, flat rate with significantly less burden involved.
I think what they get control of the institutional profit centers (hospitals, specialized legal cases, sports teams, properties, and mass privileges such as travel authority and hosting rights to visiting dignitaries).
1) What are the arguments against enabling to PI whose program/project brings in the indirects to have a say in how those indirects are spent by the institution?
2) Institutions, I believe, have targeted certain faculty for seizure of not only indirects, but direct costs. The intrinsic "academic rules" governing such seizures from vulnerable (not administratively represented) faculty are insufficient. Is that a recognized or acknowledged problem in your administrative allocations of resources, or do you follow the lead of the administrative hierarchy?
As far as I can tell there are no arguments, only mandates from the institution. The units and programs that are actually creating the indirects get very little back from the institution and faculty have probably no say in how they get used or invested.
I think institutions could be more transparent about how these funds are used. They do have the ability to track what comes in and what goes out. But at the end of the day they rule by fiat, providing no sense of line items, etc. I don't know how much this gets questioned by faculty. I don't believe these funds are used as piggy banks for wasteful initiatives and they really do cover necessary costs, but I think very few people actually know what is behind the curtain.
I'm not entirely convinced by this. One of the main problems with the current system is that it incentivizes inefficiency and disincentivizes efficiency. If a university makes its operations more efficient, then it gets less money from the federal government. I've seen this have real consequences for how universities think about investments and return on investment (e.g., expenditures that would come out of their own budget, which reduce their ongoing operating costs).
I think a flat rate (which would be around 50%, not 25% or 15%) would make sense. Note that cost of living, which you raise as a disparity between different institutions, is already part of direct costs -- if the indirect costs in an expensive urban area are higher, well, so are the direct costs, so the ratio should be similar. And, if the UC system has a particle accelerator, and we think that's a good thing, why should sociology grants be paying part of the cost of that? If that is actually worth having, there are probably better ways to pay for it!
What mechanisms are at the disposal of the individual PI to prevent the seizure of funds by the institution that is administratively controlling the grants.
Not just indirect costs, but Direct costs budgeted by the PI for work performance?
Who or what entity can hold the administration responsible?
They aren’t just administratively controlling the grants. The grants are given to the institution (or an affiliated organization) not the PI. I bring this up because it affects the arguments one wants to make.
Well the first thing is to figure out whether it’s actually “robbery” in the legal-ish (as opposed to ethical) sense given where the grant actually lives. Different funding agencies/organizations can have different rules, so I’d recommend understanding them and then making the appropriate case.
So, let's take the case and make sense of a personal experience:
Briefly:
1) I was recruited by a prominent University to conduct cutting edge translational research into a "Joint VA-University" tenure track faculty position. Salary was funded by VA with 25% effort coming from the University, and the lab space I was assigned was on the VA campus. The project manager (PI/administrator at the University) held the exact same titular position, which enabled my recruitment onto the team venture.
2) Although our titles were the same, the PI/administrator was the only one who was granted support and Institutional privileges to submit for funding to State and Federal-NIH/DoD agencies. I was transiently afforded the privilege to request funding through the VA, where the PI/administrator held great sway with peer-review panels.
3) The work-product that emerged from years of labor from the VA laboratory was submitted to the NIH under the PI/administrator's name, but none of the proceeds came back to the VA to support the work or labor of the VA-lab.
4) Whistleblower activity (that was approved by the VA-leadership) was used to bring attention to the ethical (?legal) conflicts; the end result was termination of the employment of the whistleblower (me) by the VA. The University, which I believe contributed to the procedures followed by the local VA-administrative officials, then followed suit and disavowed earned "tenure" privileges to similarly dismiss me from it's employment-even though it hadn't paid me for services for over a decade by the time of the dismissal.
There's another major arm to this story which I will hold back for now, but what are the ethical/legal guidance that can guide this particular series of events?
I've been reading all your posts on Indirect Costs and there are some interesting ideas and insights. I take issue with one of your first sentences "[c]osts are likely too high and are not transparent at all." This seems like a talking point I keep seeing over and over. Based on what I know from 16 years of experience in research administration (full disclosure: I am not an expert in how the indirect sausage is exactly made), it seems that the calculation that goes into indirect rates is fairly precise but very bureaucratic involving the need to hire "consultants". The amount of time we waste on building and space classification (bean counting), for example, is absurd. I do not think that rates are somehow gamed in ways that create largesse, nor in real dollars does it significantly result in unchecked waste. It's not the rates that are exactly problematic as everyone seems to be fixed on.
The real issue here is government regulation - and I say this as a liberal. There are two key things going on here: one, administration of grants has had very little innovation since I started in the late 2000s. Yes, universities have purchased systems that are slightly more efficient at transmitting proposals to agencies, but on the post award side where we spend most of our time, we still manage complicated effort and large budgets on excel spreadsheets. I know there are tech companies that are earnestly trying to solve some of these massive inefficiencies - the computing power and technology are there, but the biggest factor is university adoption of such systems. They don't want a third party to have a connection to their data warehouses for security reasons. This makes the risk assessment and procurement process next to impossible for deploying technology that could drastically reduce complexity and administrative burden.
The second issue is the Federal government. You posted a COGR graph showing the regulatory burden that has exploded since Uniform Guidance went into effect in 2014. In my lived experience I can tell you that my work life has gotten increasingly worse since UG. Anyone that has had to manage a faculty members’ effort over the salary cap on 16 projects knows exactly what I'm talking about. The way grant effort is tracked and reported is insane. Procurement is another area, as is the lack of uniformity in post award actions at the sponsor level from how we request prior approval, the forms we use, the lack of clear guidance, etc, etc.
I think when people bring up efficiency, they are talking about administration, but many don’t understand that administration costs are capped at 26% (and have been since the 90’s). The “Administration” part of F&A is almost never fully recovered by institutions and is often a loss leader, so anything over 26% is really on the university (not taxpayers) and if they were smart and efficient they would get their admin costs closer to 26%. The Facilities part of an F&A rate are really the driver here. Because of this Universities are in some ways incentivized to grow and expand their campus footprint (as also pointed out), but to what extent I'm not sure. So, when people say things like incentivize efficiency, it sounds good, I just don't know how you operationalize that in terms of the actual rate agreement if we're talking about space being the main driver.
The real question I don't think is about indirect costs per se and whether the rates are “too high”- indirects are a laughably small portion of grant costs on a macro level and related to the federal budget. If you do the budget math for NIH, indirects work out to 20% of the proportion, with 80% to directs. I do wonder if we could get to a flat rate or a tiered flat rate that just treats all projects the same and gets rid of MTDC and everything that is administratively burdensome about having to justify rates in the first place. Universities would save loads of time if we stopped accounting for all our space. It would make training grants, for example less of a money pit and ultimately allow everyone to focus on more important things like actually doing and supporting research. Certainly, this could be modeled at a large scale to get an answer on the best approach.
I think we are saying much of the same thing, just slightly different. I would be interested in actual models to show if you could get to a lower effective, flat rate with significantly less burden involved.
Wow.
That seems like a system asking for abuse.
I think what they get control of the institutional profit centers (hospitals, specialized legal cases, sports teams, properties, and mass privileges such as travel authority and hosting rights to visiting dignitaries).
Connection to wealth as a side hustle?
1) What are the arguments against enabling to PI whose program/project brings in the indirects to have a say in how those indirects are spent by the institution?
2) Institutions, I believe, have targeted certain faculty for seizure of not only indirects, but direct costs. The intrinsic "academic rules" governing such seizures from vulnerable (not administratively represented) faculty are insufficient. Is that a recognized or acknowledged problem in your administrative allocations of resources, or do you follow the lead of the administrative hierarchy?
As far as I can tell there are no arguments, only mandates from the institution. The units and programs that are actually creating the indirects get very little back from the institution and faculty have probably no say in how they get used or invested.
I think institutions could be more transparent about how these funds are used. They do have the ability to track what comes in and what goes out. But at the end of the day they rule by fiat, providing no sense of line items, etc. I don't know how much this gets questioned by faculty. I don't believe these funds are used as piggy banks for wasteful initiatives and they really do cover necessary costs, but I think very few people actually know what is behind the curtain.
I'm not entirely convinced by this. One of the main problems with the current system is that it incentivizes inefficiency and disincentivizes efficiency. If a university makes its operations more efficient, then it gets less money from the federal government. I've seen this have real consequences for how universities think about investments and return on investment (e.g., expenditures that would come out of their own budget, which reduce their ongoing operating costs).
I think a flat rate (which would be around 50%, not 25% or 15%) would make sense. Note that cost of living, which you raise as a disparity between different institutions, is already part of direct costs -- if the indirect costs in an expensive urban area are higher, well, so are the direct costs, so the ratio should be similar. And, if the UC system has a particle accelerator, and we think that's a good thing, why should sociology grants be paying part of the cost of that? If that is actually worth having, there are probably better ways to pay for it!
Stuart
What mechanisms are at the disposal of the individual PI to prevent the seizure of funds by the institution that is administratively controlling the grants.
Not just indirect costs, but Direct costs budgeted by the PI for work performance?
Who or what entity can hold the administration responsible?
They aren’t just administratively controlling the grants. The grants are given to the institution (or an affiliated organization) not the PI. I bring this up because it affects the arguments one wants to make.
So how does the individual control or react to institutional robbery?
Well the first thing is to figure out whether it’s actually “robbery” in the legal-ish (as opposed to ethical) sense given where the grant actually lives. Different funding agencies/organizations can have different rules, so I’d recommend understanding them and then making the appropriate case.
So, let's take the case and make sense of a personal experience:
Briefly:
1) I was recruited by a prominent University to conduct cutting edge translational research into a "Joint VA-University" tenure track faculty position. Salary was funded by VA with 25% effort coming from the University, and the lab space I was assigned was on the VA campus. The project manager (PI/administrator at the University) held the exact same titular position, which enabled my recruitment onto the team venture.
2) Although our titles were the same, the PI/administrator was the only one who was granted support and Institutional privileges to submit for funding to State and Federal-NIH/DoD agencies. I was transiently afforded the privilege to request funding through the VA, where the PI/administrator held great sway with peer-review panels.
3) The work-product that emerged from years of labor from the VA laboratory was submitted to the NIH under the PI/administrator's name, but none of the proceeds came back to the VA to support the work or labor of the VA-lab.
4) Whistleblower activity (that was approved by the VA-leadership) was used to bring attention to the ethical (?legal) conflicts; the end result was termination of the employment of the whistleblower (me) by the VA. The University, which I believe contributed to the procedures followed by the local VA-administrative officials, then followed suit and disavowed earned "tenure" privileges to similarly dismiss me from it's employment-even though it hadn't paid me for services for over a decade by the time of the dismissal.
There's another major arm to this story which I will hold back for now, but what are the ethical/legal guidance that can guide this particular series of events?