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Federal Research: System for Reimbursing Universities' Indirect Costs Should Be Reevaluated

RCED-92-203 Published: Aug 26, 1992. Publicly Released: Aug 26, 1992.
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Highlights

Pursuant to a congressional request, GAO examined how the federal government reimburses universities for overhead, or indirect costs, related to federally funded scientific research.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget The Director, OMB, should designate a single cognizant federal agency, using a consistent approach, to negotiate indirect cost rates for federally sponsored research at universities.
Closed – Implemented
OMB's actions indicate that it intends to work with the two cognizant agencies to achieve consistency rather than going with only one. The ONR has implemented procedural changes to tighten central review of universities' indirect cost rates. DOD also is pursuing changes to the Defense Supplement of the Federal Acquisition Regulation to enable ONR to negotiate predetermined multiyear indirect cost rates with universities.
Office of Management and Budget OMB should examine ways to more directly involve a cross section of the university community in the work of the task force, either through direct membership or as a separate advisory committee, in evaluating alternative methods (including, but not limited to, ones GAO identified) for reimbursing universities for indirect costs related to federally sponsored research.
Closed – Not Implemented
In a July 25, 1994, letter, the Acting Director of OMB and the Director of OSTP stated that they planned no pervasive review of A-21 this year in order to give the 1993 revisions to A-21 the chance to demonstrate sufficiency in practice before revisiting them. OMB and OSTP officials met with university representatives in May 1994. The Association of American Universities is serving as a point of continuing contact between senior administration officials and the university community.

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Topics

Accounting systemsColleges and universitiesCost accountingGrant monitoringInteragency relationsInternal controlsOverhead costsQuestionable procurement chargesResearch and development contractsResearch and development costs