GAO: Growth in NIH Indirect Cost Reimbursements to Universities Should Be Assessed

November 6, 2013

In late September, the US Government Accountability Office released to the US Senate Committee on the Budget a report on the impact of growth in indirect costs on the NIH mission. Their goal was to identify (1) changes in indirect cost reimbursements to universities and (2) key factors affecting these reimbursements and “what assessment NIH has done to address any impact of these costs on NIH’s research mission.” The GAO analyzed NIH data and interviewed university officials, Department of Health and Human Services (HHS) officials, and other stakeholders in its analysis.

The report identified a trend for indirect costs increasing faster than direct costs, but noted that the trend was not consistent, with some periods showing more dramatic changes. For example, in the period from fiscal year 2003 to 2012, indirect costs increased at 16.9 percent compared to direct costs at 11.7 percent. Among the key factors were rising facilities costs, including uncapped reimbursement for interest costs; and capped administrative costs that are no longer adequate to cover increased regulatory requirements or the expenses of essential and ever advancing technologies.

The GAO recommended that NIH consider how growth in indirect costs could potentially limit the amount of funding available for total research in the future and “assess the impact of growth in indirect costs on its mission.” While agreeing with the recommendation, HHS disagreed with the risk assessment, noting that indirect costs have remained a stable percentage of the NIH budget.

View the complete report »