The document, authored by David Kennedy and published by the Council on Governmental Relations (COGR), addresses the improvement of the Facilities & Administrative (F&A) rate-setting process between U.S. research institutions and the federal government. The F&A rate, critical for reimbursing indirect costs incurred by academic institutions during federally funded research, is negotiated primarily by two federal agencies: the Department of Health and Human Services’ Division of Cost Allocation (DCA) and the Department of Defense’s Office of Naval Research (ONR). The report evaluates current practices, referencing a Government Accountability Office (GAO) study that recommends increased consistency and transparency in F&A rate application across institutions, regardless of agency cognizance. It notes significant variability in rate outcomes, particularly between institutions managed by DCA and ONR, and attributes this to differing practices, methodologies, and the more centralized nature of ONR's process.
COGR outlines a series of recommendations to enhance the F&A rate-setting process, focusing on periodic consultation among stakeholders, transparent documentation of rate proposals and adjustments, elimination of artificial limits on rate increases, consistency in methodological approaches, robust central leadership to resolve disputes, clarification and understanding of the appeals process, and the universal application of the 1.3% utility cost adjustment. The implementation of these measures aims to foster fairness, equity, and predictability in establishing F&A rates, thus ensuring institutions are adequately reimbursed for research infrastructure costs. The report underscores the necessity of collaborative engagement between federal agencies and research institutions to maintain the integrity and sustainability of the federal research funding partnership.
