In one cost-cutting effort, the President’s proposed FY18 budget seeks to reduce costs by imposing a cap on indirect cost rates at just 10% for all grants issued by the NIH. While indirect costs are currently negotiated between grant recipients and a cognizant agency, a budget-related document, issued by HHS, explains that the Administration wants to do away with the time and paperwork associated with this negotiation in lieu of a uniform indirect cost rate of just 10%. In part, this effort is being couched as relieving the indirect cost rate negotiation burden on grantees. However, what is odd is the fact that the relatively new Uniform Guidance allows some grantees the option of selecting a 10% indirect cost rate in lieu of going through the process of obtaining a negotiated rate, which may be higher. Therefore, under the current structure, some grantees are given the ability to decide for themselves whether they want the lower 10% rate or find it more useful to go through the more labor-intensive negotiation process to capture a greater amount of their indirect costs. Instead, the Administration is proposing to uniformly limit grantees in their ability to recapture all of their costs. A compromise could be to allow more organizations to opt out of the indirect cost rate negotiation process in lieu of a flat rate, yet the currently proposed approach takes that decision away from the grantee recipients, which may well impact organizations’ willingness to take on NIH grants, thereby potentially slowing the important and critical scientific and medical research of this agency.
We will be following and updating our readers on this, among many other aspects of the President’s budget.