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GAO-07-294R 1 (2007-01-31)

handle is hein.gao/gaocrptauth0001 and id is 1 raw text is: Sai Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 January 31, 2007 The Honorable Tom Coburn, M.D. Ranking Minority Member Subcommittee on Federal Financial Management, Government Information, and International Security Committee on Homeland Security and Governmental Affairs United States Senate Subject: National Institutes of Health Extramural Research Grants: Oversight of Cost Reimbursements to Universities Dear Senator Coburn: The Department of Health and Human Services' (HHS) National Institutes of Health (NIH) is the nation's leader in conducting and sponsoring biomedical research. More than 80 percent of NIH's budget, which totaled over $28 billion in fiscal year 2006, is used to support extramural research, which is primarily conducted at over 500 universities' nationwide. NIH reimburses universities for direct costs that can be specifically attributed to research sponsored by NIH grants, including costs for labor and materials used solely to carry out the research. It also reimburses universities for indirect costs, which include various facility and administrative expenses incurred by the universities for the shared support of such research. To be reimbursed for direct and indirect costs, universities must properly identify and claim them in accordance with federal guidance. Office of Management and Budget (OMB) Circular No. A-212 establishes the principles for determining the types of direct and indirect costs that are allowed to be claimed and the methods for allocating such costs to federally funded research. Because indirect costs cannot be specifically attributed to a particular research grant, they are charged via an indirect cost rate that is applied to the direct costs for each grant agreement. Each university develops a proposed indirect cost rate, based on information such as the amount of physical space used for conducting research. A university's final indirect cost rate is generally determined by negotiating its proposed rate with HHS's Division of Cost Allocation (DCA).3 DCA is responsible for ensuring that the final negotiated indirect cost rate complies with OMB Circular No. A-21. Additionally, for each university that received $25 million or more in federal funds for its most recently completed 'We are using the term university to refer to any domestic institution of higher education. 22 C.F.R. pt. 220 (2006). 3OMB assigns responsibility for negotiating indirect cost rates to HHS's DCA or the Department of Defense's Office of Naval Research, normally depending on which department provided more funds to the educational institution over the past 3 years. According to DCA, its staff negotiates rates for more than 90 percent of the universities that receive NIH grants. GAO-07-294R Extramural Research Grants

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