Dr. Roger Albin, a neurologist at the University of Michigan, writes:

Thanks for posting on the NIH demarche on indirect cost rates.  As commented in the NYT article, this would severely wound biomedical research in the USA. A couple of additional comments that may interest your readers.

1. If you talk to university research administrators, they will tell you that these indirect cost allocations don’t cover the costs of supporting research. Unlike some claims by university administrators, this one is credible. To give one example, the amount of salary that NIH grants allocate to investigators directing research projects is capped.  There is usually a substantial differential between faculty salary and what NIH pays.  The institution/investigators’ departments make up the difference.  This consumes funds that could be used for supporting research physical infrastructure, needed support personnel, regulatory compliance apparatus such as IRBs, etc.  There are other examples.  Ultimately, the NIH indirect cost allocations don’t completely cover the cost of supporting research.  Funds have to come from somewhere else – frequently income from clinical activities.  Up to this point, research institutions have been able to manage these subsidies. The 15% rate in the NIH announcement would make it impossible to support research activities on anything close to the present scale, even for relatively rich institutions. 

2. While the NYT article correctly describes this policy as a major change, it doesn’t really convey the foundational nature of Federal support for research infrastructure via these indirect cost agreements. Indirect cost agreements are negotiated between NIH and recipient institutions. The initial agreements generally date back to the 1960s and 1950s and were a key component of the post WWII/Cold War Federal commitment to supporting American science.  They are periodically re-negotiated, and as scientific research hasn’t got cheaper, they’ve gradually climbed, but in historic context, they were usually fairly generous at the outset. This new NIH policy would wrench away one of the primary supports of American science.   

3. The NIH statement linked in the NYT article is interesting reading. It’s likely this policy was drafted by individuals ignorant of how research works in the USA and/or so committed to neoliberal ideology that they are incapable of understanding how research works at all.

1. It’s correct that many foundations award lower indirect costs than NIH.  These foundations function with the general understanding that NIH and the recipient institutions are subsidizing research infrastructure.

2. Whomever wrote the NIH policy clearly didn’t do their homework. It’s stated that my institution, the University of Michigan, doesn’t accept grants with indirect cost awards below the NIH indirect cost rate.  I know this isn’t correct as I’ve been the recipient of foundation grants with substantially lower indirect rates.

4. One has to wonder where this came from. The incoming NIH Director, Bhattacharya, is a Stanford faculty member and should have some understanding of research administration.  If he signed off on this, he is even more incompetent than his track record indicates.