Indirect costs at DOE, cuts to evidence/data, and other news
I would really like to stop writing about indirect costs, but federal agencies keep forcing my hand. The Department of Energy recently announced that it will “save $405 million” by slashing indirect costs to the same flat rate of 15% that NIH previously tried.
To be clear: there’s a great case for reforming indirect costs, requiring more transparency, and reducing the federal regulations that are the root cause of so many indirect costs!
But all of that takes time.
An immediate switch to 15% (without cutting even one federal regulation) is as unworkable as if someone told you that as of today, you’re not allowed to spend more than $1,000 a month on rent or a mortgage. Need time to sell a house, get out of a lease, find a new place, perhaps find a roommate? Don’t want to live 2 hours from your job? Too bad.
I predict that DOE’s effort will meet the same fate as NIH: it will be struck down in the courts.
Why? Like NIH, the DOE purports to rely on 2 C.F.R. § 200.414(c), which allows agencies to grant exceptions to the indirect rates negotiated by HHS with universities:
This exact regulation came up in the NIH litigation (where the federal court granted a preliminary injunction, followed by a permanent injunction on April 4). In that case, the federal court was having none of the agency’s pretense that Section 200.414(c) (which is only about exceptions) allowed such a sweeping change.
First, the court said that under subsection (3), a federal agency is required to set out the “policies, procedures, and general decision-making criteria” whereby it will use “deviations” from the negotiated rates. Announcing a flat rate for all university grants isn’t the same as crafting such a set of procedures and criteria—instead, it is simply trying to issue a broad rule that ignores all the negotiated rates, with no other criteria or policies at hand.
Second, the regulation inherently has a “step-by-step process” by which the agency first announces a new policy for exceptions/deviations and notifies OMB, and then in the future, applies that new policy to craft such “deviations.” Just putting out a new flat rate for everyone doesn’t follow that process.
Third, both NIH and DOE are trying to create an exception that swallows the rule. The rule only allows deviations from the usual indirect rate for a “class of Federal awards or a single Federal award.” If a federal agency could use this exception to create a blanket rule that applies to all universities in one fell swoop, then what’s the point of all the other regulations and negotiations in the first place?
It’s as if a state law as to speed limits said that “the state police are allowed to make exceptions for emergency situations, such as a trip to the hospital,” and then the state police used that provision to say, “Speed limits on all state highways are now 100 miles per hour.”
Not a perfect analogy, but the point is that a rule allowing narrow exceptions doesn’t mean, “Go wild, create a whole new rule here!”
Lastly, it also makes no sense to me to announce a flat indirect rate that completely ignores all of the other rules and regulations defining what can be counted as an “indirect cost” in the first place. If we’re going to ignore all of those rules, then what even counts as an “indirect cost” now?
What if universities respond (as they likely should) by trying to attribute most or all of the central administrative costs (including everything from electricity to the janitors) to each direct research grant? That would indeed “cut” indirect costs and it would make accounting more transparent—but at the cost of more bureaucracy and inefficiency.
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Speaking of government “efficiency,” here’s the latest on that issue at FDA:
* Fire a bunch of people without knowing or caring what they do;
* Realize that their work was actually necessary;
* Hire outside contractors (likely at higher rates) and train them to do the same work.
As well, Politico just reported on a stunning array of data/statistics teams that have evidently been canceled at HHS:
The cuts threaten to obscure the severity of pressing health threats and whether they’re getting better or worse, leaving officials clueless on how to respond. They could also make it difficult, if not impossible, to assess the impact of the administration’s spending and policies. Both outside experts and impacted employees argue the layoffs will cost the government more money in the long run by eliminating information on whether programs are effective or wasteful, and by allowing preventable problems to fester.
…
The offices that ran the Sickle Cell Data Collection Program, the National Intimate Partner and Sexual Violence Survey, the Pregnancy Risk Assessment Monitoring System and the National Firefighter Registry for Cancer were scrapped. So were teams that reported how many abortions are performed nationwide, the levels of lead in childrens’ blood, alcohol-related deaths, asthma rates, exposures to radon and other dangerous chemicals, how many people with HIV are taking medication to suppress the virus, and how many people who use injectable drugs contract infectious diseases.
I’m at a loss to explain this. In his first administration, Trump signed the Evidence Act of 2018, a bipartisan effort to vastly expand data collection and evaluation across the entire federal government. The main problem with the Evidence Act is it didn’t go far enough, and wasn’t followed up with sufficient appropriations to each of the agencies.
But apparently the new administration is running 180 degrees in the opposite direction: Demolishing one data collection effort after another. I haven’t heard anyone even try to give a good reason why we would benefit from having less data on everything from education to lead poisoning rates. It’s certainly not efficient. It’s like trying to save money on your electricity bill by taking a sledgehammer to the meter outside your house.
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Finally, Good Science Project in the news recently: