Indirect Costs of Health Research--How They Are Computed, What Actions Are Needed

HRD-79-67: Published: Jul 27, 1979. Publicly Released: Aug 24, 1979.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Congress has voiced concern over the large proportion of health research funds spent for indirect costs, wide range in indirect cost rates among institutions, methods used to determine such rates, and Federal audit and negotiation processes. Questions have also been raised as to whether Federal limits on indirect costs reimbursement should be reinstated.

Federally sponsored health research has increased from $1.6 million in 1973 to an estimated $2.7 billion in 1978. Indirect costs associated with this research are taking a greater share of each research dollar. Comparing indirect cost rates among institutions is not meaningful for measuring the relative efficiency of research activities. Many factors, such as the age and type of facilities used, the type of research performed, and a host of other considerations, cause wide variations in indirect cost rates. Various sets of Federal guidelines have been promulgated which set forth cost pinciples and negotiation instructions to be used for reporting and recovering research costs under grants and contracts. Government-wide guidelines have been issued for educational institutions and for State and local governments.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: If Congress should desire to further limit Federal participation in research project expenditures beyond the present legislative restriction, this should be achieved through some formal ceiling on Federal reimbursement, rather than by limiting reimbursement on just the indirect cost portion of research.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of the Office of Management and Budget (OMB) should require that there be a consistent presentation of principles in the guideline for educational institutions, the guideline for State and local governments, and the proposed guideline for nonprofit research institutions. OMB should work with the Department of Health, Education, and Welfare (HEW) to encourage that the principles in its guidelines for hospitals are brought into conformity with OMB guidelines. The Secretary of Defense should require that the Defense Acquisition Regulation incorporate the cost principles in HEW's guidelines for nonprofit research institutions and hospitals. The Secretaries of Defense and HEW, either separately or jointly, should analyze current practices for auditing indirect cost proposals related to research grants and contracts to identify the benefits derived.

    Agency Affected:

 

Explore the full database of GAO's Open Recommendations »

Jul 21, 2016

Jun 23, 2016

May 12, 2016

Apr 14, 2016

Mar 4, 2016

Oct 30, 2015

Sep 9, 2015

Aug 17, 2015

Jul 9, 2015

Apr 27, 2015

Looking for more? Browse all our products here