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The Real Cost of Indirect Costs

Viewpoint From our Director of Research Administration

By Keleigh Quinn

I’ve worked in Sponsored Research Administration for nearly 20 years; the first grant I managed was a small award from the Department of Education that covered the cost of an after-school program for inner-city high school students. Since then, I’ve worked at a specialized hospital, a small business that focused on researching and creating electrochemical technologies, and finally, two different schools/departments within a large university.

I never thought I would be reading stories from major news outlets discussing what indirect costs are and how capping them would destroy the important work my colleagues do every day. I certainly never expected to see such skepticism from the public towards federally funded research.

Indirect costs (known as “indirects”) were created to save time, money, and resources while ensuring that institutions could cover the costs of doing research. They are negotiated with the same federal agencies who fund this research through a lengthy process that involves preparing a detailed report of recent financial records and costs. Rather than have administrators and accountants figure out how to divvy up the electric bill each month amongst tens, or even hundreds, of projects, those costs are rolled into indirects, which also cover items such as salaries for the janitorial staff and glass washers without the need to figure out how many flasks or tubes were used for which experiments. They pay for the incredibly smart people who oversee the ever more complex task of managing compliance – from conflicts of interest to making sure we adhere to export control policies, animal and human subjects’ protocols, and biohazard safety. The IT department not only keeps computer equipment up and running but also ensures the data generated from these government sponsored projects is kept safe and protected. It would take endless hours to calculate the benefit of these costs to each project, but they are all a necessary part of the cost of conducting research, especially federally funded research, which brings with it a myriad of administrative and compliance stipulations that are not required with foundation or private funding.

And then there’s me and my team. How should we charge our time across the portfolio of awards we manage? Every Research Administrator knows that sometimes that small EPA award can take up more time than the multi-million-dollar Department of Defense contract. Indirect costs cover the salaries of administrators reading 100+ page government RFPs, or solicitations, to note down every requirement and nuance. They cover the cost of the time-consuming processes required to facilitate these projects, such as budget calculations and cost proposals that detail every supply and piece of equipment that will be purchased. Administrators review monthly charges, ensuring that all the costs are allowable and adhere to government policy. There is no waste here: Research Administrators exist to help institutions be excellent stewards of federal funds.

As I said when the COVID-19 outbreak caused backlash against the scientific community, and especially against scientists who conduct vaccine research, I’ve never encountered anyone through this job who is doing this work to get rich. These scientists and engineers choose this path because they want to solve some of the biggest problems our world faces. Indirect costs just help provide them with the resources they need to try to make a real difference in our world. These costs that are suddenly so talked about in the news allow researchers to invent technologies to help patients regain mobility after a stroke, discover microbes and enzymes that can break down plastics in landfills, study deep-sea creatures and find ways to make our oceans healthier, and develop cancer vaccines that will save lives. Many of these discoveries not only help people but also stimulate the economy. Indirect costs create jobs, help produce life-changing and money-making inventions and keep America at the forefront of scientific discovery – this research is exactly what makes America so great.

While the focus seems to be on universities and research institutions right now, government contractors all have federally negotiated indirect cost rates, likely much higher than those negotiated by universities. The government knows that this is the cost of conducting research because they are the ones who negotiate the rates. If they want to make changes, they need to implement them at the negotiation stage for each institution, taking into account the millions of variables that go into calculating these numbers. The rest of us just want to get back to work.

Read what our Founding Director Donald Ingber has to say in this powerful letter

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