|The review identified a number of actions that
would help make the partnership more effective and efficient.
Issue: Although a number of Federal agencies have
policies regarding research misconduct, not all do, and variations in policy and practice
send mixed signals to universities regarding Federal interests in this area. The interests
of the Federal government will be advanced if greater uniformity can be brought to Federal
policies in this area and universities will find more consistency in their interactions
with government agencies.
Discussion: As a major funder, producer, and user of research,
the Federal government has a vital interest in the integrity of the research record.
Advances in science and engineering depend on the reliability of the record as do the
benefits associated with them in areas such as health and national security. Sustained
public trust in the scientific and engineering enterprise also requires confidence in the
record and in the processes involved in its ongoing development. There will be occasions
when it will be alleged that an individual researcher has failed to act in accordance with
values of the scientific and engineering enterprise, values essential to public confidence
in the enterprise and the integrity of the research record. In such cases, the Federal
government must have clearly stated policies defining the circumstances under which it
will consider that research misconduct has occurred in the course of Federally funded
research, and guidelines for addressing such allegations.
|ACTION: Institute Uniform Government
Policies and Practices for Research Misconduct
- The NSTC will complete the process initiated in 1996 to
develop a government-wide definition of research misconduct and guidelines for handling
cases of alleged research misconduct. The policy will affect all research funded by the
Federal government, including both intramural research and extramural research funded
through universities, non-profit organizations, and the private sector. Agencies will have
twelve months to implement the new policy once it is finalized.
2. Merit Review
Issue: Although most parties would agree with the
principle that excellence is promoted by rewarding merit, exceptions to merit review do
occur in awarding research funds. It is in the interest of both the universities and the
Federal government to ensure that merit review is well understood by the stakeholders, and
to maintain the integrity of the process.
Discussion: Both universities and the Federal government need
to be able to explain how funding decisions are made. When universities or other
organizations seek research funds though non-merit-based means, the integrity of the
enterprise suffers, which could ultimately undermine support for Federally-funded
research. Both partners should seek ways to explain and defend the merit-review process,
and to ensure that awards made outside of the merit review process decrease over time.
|ACTION: Clarify and Extend Use of Merit
Review in Awarding Research Funds
- The NSTC reaffirms the principle of merit review in awarding
- The NSTC supports OMBs effort to refine the definition
of merit review in its annual revision of the terms in OMB Circular A-11,
"Preparation and Submission of Budget Estimates (part 1)."
- The NSTC will examine ways to extend agency application of
merit review in awarding research funds and seek ways to decrease practices that bypass
3. Cost Sharing Policies and Practices
Issue: Cost sharing, as defined in OMB Circular
A-110, "Uniform Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals, and other Non-Profit Organizations," is
that portion of project or program costs not borne by the Federal government. With the
exception of cost sharing that is required by law, agencies vary in their approaches to
cost sharing and most do not have explicitly articulated, agency-wide policies. Individual
program managers therefore often make decisions on a program-by-program basis. Actions
taken by program managers may make sense from an individual program perspectivecost
sharing can be a means of maximizing the number of awards within limited budgetsbut
the cost/benefit analysis may look different from an agency or even a national
perspective. Universities have four principal sources from which to draw funds to support
their activities. These are tuition, gifts, Federal funds, and state funds in the case of
state universities. Ad hoc cost sharing practices can have a detrimental impact on the
university research and education system as a whole (for example, by drawing funds for
research from sources that would otherwise support undergraduate education). And while it
can be in the governments interest to accept universities offers to share in
the costs of research in cases where it is not required, certain accounting rules tend to
discourage universities from volunteering to do so.
Discussion: A number of issues identified by this review merit
- Lack of clarity about agency cost sharing expectations creates difficulties.
Universities have indicated that lack of clarity about agency cost sharing expectations
reduces their ability to plan financially. Unaware of an agencys cost sharing
expectations, a university may be caught short if it has submitted a proposal in response
to a program announcement but does not learn in a timely way about the agencys cost
sharing expectations. Without knowing what are the "rules of the game," a
university may be outbid by another and lose the award, or an agency may not receive the
optimum level of cost sharing that it seeks. To avoid these difficulties, and to ensure a
level playing field, it would be helpful if agencies announced, in advance, as part of
their request for proposals in program announcements, if cost sharing is a criterion of
award selection, and how, including explicit information regarding the amount of cost
sharing expected and about the process by which cost sharing will be considered.
- The Federal requirement that institutions absorb the overhead costs associated with
voluntary sharing in the direct costs of a research project can create a disincentive
against voluntary contributions of faculty time.
OMB Circular A-21 requires that all university research activities, regardless of
their source of support (Federal, university, or private sponsor) be included in
calculating total research costs. These total costs provide the basis for calculating the
universitys Facilities and Administration (F&A) rate (also called indirect rate)
and for determining the share of the F&A costs for which the Federal government will
reimburse the university (the share is based on the portion of the total research that is
supported by the Federal government). Consequently, when a faculty member who wishes to
invest more time on a research project than already agreed to in the research proposal or
than is required by the Federal agency as cost sharing, the time must be still be
accounted for in the base of "organized research" for the purpose of computing
the indirect cost rate. Universities regard this requirement as a double penalty; not only
does the university bear the costs of the direct charges for faculty time spent on the
project above that expected, but including those direct costs in the base of organized
research decreases the F&A rate for the school for all projects.
The Federal governments intent in requiring this accounting practice is to ensure
that the overhead costs related to research activities (whether they are funded by the
Federal government or by the institutions) are allocated to the benefitting activities.
But it is worth noting that this level of precision in accounting normally will not fully
account for faculty time beyond that required by the faculty members employment
agreement with the institution. Moreover, faculty donate time to other activities that are
central to the working of the research enterprise, yet this donated time is not a factor
in calculating F&A rates, nor should it be, as these duties are rightly considered by
the university as part of the facultys responsibilities. For example, agencies rely
extensively on the expertise of university scientists and engineers to serve on agency
advisory panels, peer review panels, and committees, often with no compensation, providing
critical input that enables agencies to shape their research agenda and foster research
excellence. Such activities are vital to the functioning of the partnership; indeed, they
are central to it.
- Limitations on institutional reimbursement of research costs on otherwise allowable
costs should be reviewed.
Mandatory cost sharing stems from Federal cost principles and some statutes that
limit institutions recovery of costs that are otherwise reimbursable, including
limitations on indirect cost rates established by legislation. An issue of current concern
to some agencies and universities involves the cap on administrative costs as it impacts
universities that administer R&D laboratories for Federal agencies or have other
relationships with the government that have procurement aspects. For relationships that
are solely procurement in nature, the cap on administrative costs inappropriately forces
universities to share in the administrative costs for the goods and services purchased by
those agencies (unless the universitys administrative costs are at or below the
|ACTIONS: Clarify or Amend Cost Sharing Policies and
- The NSTC will explore mechanisms by which agencies might more
clearly and consistently communicate information to universities about their cost sharing
policies, practices, and expectations. One option might be to require that agencies
announce when and how cost sharing will figure in selection processes and include
information about the amount of cost sharing expected. Options should be drafted within
twelve months of this report.
- The NSTC will assess the impact of accounting practices on
voluntary cost sharing by universities, particularly as it relates to the donation of
faculty time to research projects. The review (including data collection) should be
completed and recommendations issued within twelve months of this report.
- The NSTC will assess the impact of provisions that limit
reimbursement of research costs on otherwise allowable costs, and in particular, the
impact of these cost reimbursement policies on government-university relationships that
have procurement aspects. The review (including data collection) should be completed and
recommendations issued within twelve months of this report.
4. Grants Administration
Issue: Differences in policy and practice across
Federal agencies oblige institutions of higher education to maintain separate internal
operating procedures for each agency with which they conduct business. Programmatic
variations among agencies may justify some of these differences. However, opportunities to
streamline excessive requirements could save time and resources for universities as well
as for Federal agencies.
Discussion: More uniform policies and procedures for the
administration of Federal research project grants can reduce paperwork and free faculty to
spend more time on research. The Federal Demonstration Partnership (FDP) has developed
standardized grant terms and conditions to apply to all FDP institutions that receive
support from FDP agency members. These streamlined standards have helped reduce the burden
placed upon researchers and university administrators by narrowing the differences in
grants management practices among agencies, but without compromising accountability.
However, not all agencies participate in the FDP, and only 65 universities are members.
The benefits of streamlined standards and uniform terms and conditions could be extended
to those other agencies and universities by making them applicable across all agencies.
Agency efforts to reduce agency-specific requirements should also continue.
Broader adoption of standardized procedures should not hinder further streamlining by
agencies. Prompted both by the promise of new technology and a desire to reinvent
government for better performance, efficiency, and service, Federal agencies are
developing a variety of new approaches to grants administration. One example is in the
area of electronic research administration (ERA) where the Federal Commons now under
development will provide universities a streamlined and consistent electronic interface
with the Federal agencies. Another is the "modular grant" concept currently
being studied by NIH, in which the investigator is asked to provide a
best-estimate-of-cost for a proposed project in $25,000 increments, and which encourages
subsequent disengagement from complex budget negotiations. Such agency streamlining
efforts should be encouraged and accelerated.
|ACTION: Reduce Differences in Grants
Administration Across Agencies
- The NSTC will establish an interagency group to develop terms
and conditions that will reduce differences in grants administration policy and practice
across Federal agencies to the extent consistent with individual agency needs. The
general terms and conditions should be based on those developed by the FDP and make
maximum use of the expanded authorities included in OMB Circular A-110 for all research
and research-related project grants. Where consistent with statute, the NSTC policy will
be that all Federal agencies will use the uniform terms and conditions as the default for
all research and research-related project grants. These defaults should be overridden only
when there are compelling reasons to do so. These actions should be implemented
within twelve months of this report.
- The NSTC encourages agencies to continue reducing
agency-specific requirements, consistent with their missions. Related to this, agencies
should work together to coordinate a "common face" to the university research
community in the development of ERA systems.
5. Federally-Mandated Changes in University Business Practices
Issue: Universities have expressed serious concerns
about the cumulative impact of Federally mandated requirements in business practices. For
example, the implementation of Cost Accounting Standards (CAS) by the Cost Accounting
Standards Board imposed administrative burden on universities, while provisions in OMB
Circular A-21 place limits on the recovery of both administrative costs and other costs
associated with operating the research enterprise.
Discussion: The implementation of CAS is an example of what can
happen when Federally mandated business practices are implemented without consideration of
their cumulative impact. In 1996, OMB incorporated the requirement to comply with four
cost accounting standards in OMB Circular A-21, and, for institutions with Federally
sponsored agreements totaling $25 million or more, the requirement to file a Disclosure
Statement. The latter describes the cost accounting practices of the institution, and
provides the cognizant Federal agency the ability to determine whether the institution is
in compliance with the CAS.
The university community strongly opposed the implementation of CAS. Officials in both
the university and government communities question whether CAS is appropriate given that
universities often share in the costs of research, not only as a result of the
administrative cap, but as a result of a variety of legislatively mandated cost sharing
and other practices.
Taken in isolation, the CAS requirements reflect sound business practice. Yet questions
about their efficacy are raised when they are considered in the larger context in which
universities operate. For example, the costs of CAS implementation are recoverable under
Federal contracts with commercial concerns, but they are not for universities (at least if
their administrative costs are above the A-21 mandated cap on administrative costs.) There
are other important differences between the treatment of commercial concerns and
universities under CAS that should not be overlooked in the future when changes in
accounting practices are proposed. In the commercial arena, adjustments are made in
contracts when cost recovery is affected by government changes in cost accounting. For
universities, however, where the government favors multi-year F&A rates, changes in
recovery can only be made at the time the new F&A rate is renegotiated. More
importantly, Federal sponsoring agencies rarely increase the overall value of sponsored
agreements to accommodate increases in F&A rates.
|ACTION: Establish Mechanism to Review Impact of Proposed Changes in
- The NSTC will consider the establishment of more effective mechanisms for reviewing
government business policies and practices, both current and prospective, with respect to
sponsored research to consider their relationship to each other, assess their impact on
research, and determine their compatibility with university processes.
6. Regulation of Research
The review identified two areas where regulatory and administrative reform
should be considered: the system of certifications and assurances by which universities
demonstrate compliance with applicable national policies, and mechanisms for ensuring good
Certifications and Assurances
Issue: Certifications and assurances are used by agencies
to obtain institutional and individual agreement to comply with the relevant national
policy requirements. The two mechanisms are implemented and enforced differently, creating
administrative complexity, yet a single mechanism might suffice.
Discussion: Universities are subject to many national policy
requirements by virtue of receiving Federal grants and contracts. The requirements
originate in approximately thirty statutes, Executive Orders, treaties and conventions,
and are often further delineated in implementing regulations. Examples of current
requirements are those concerning nondiscrimination on the basis of race, color, national
origin, religion, sex, age, or handicap; the treatment of live organisms, including humans
and animals; and environmental quality.
Awardees provide assurances to Federal agencies of their compliance with applicable
national policy requirements by their acknowledgment of the terms and conditions of the
award. Failure to comply can result in suspension of further payments by the agency under
the award or termination of the entire award, if necessary.
For a few national policy requirements, agencies are required by statute or government
wide regulation to obtain a certification, which is a signed declaration testifying to the
recipients compliance with a national policy requirement. Institutions become liable
for criminal penalties by virtue of certifying compliance with a national policy
requirement, even if the failure to comply with the national policy itself is not subject
to such penalties; these are more severe penalties than the penalties associated with
failure to comply with assurances. Only three national policies mandate the use of
certifications by statute or government-wide regulation. These are associated with the
requirements of the Drug-Free Workplace Act; debarment and suspension rules; and the
prohibition against the use of Federal funds for lobbying as required by law (31 U.S.C.
The three national policies for which certifications are required are as important, but
do not appear to be more important, than the national policy requirements Federal agencies
address using assurances. Replacing these certifications with assurances would reduce
administrative complexity and paperwork for both Federal agencies and awardees and
facilitate the use of electronic research administration. Relying on assurances would
remove disparities in the penalties associated with certifications and assurances.
In addition to the question discussed above, whether assurances can be used in lieu of
certifications for the few national policies that currently require certifications, there
is a second question: can certifications and assurances be handled more efficiently on an
institutional basis, rather than separately for each individual Federal award?
Universities and other research performers comply with most national policy requirements
for which certifications and assurances are required through institution-wide policies,
procedures, and internal controls, rather than by taking actions specific to each award.
Obtaining awardees commitments on an institutional basis, rather than requesting the
identical commitment each time a potential awardee submits a proposal, would reduce
paperwork for Federal agencies, universities, and other awardees, especially since only a
fraction of the proposals or applications are selected for awards.
|ACTION: Streamline Certification
and Assurances Requirements
- The NSTC will identify the appropriate agencies to conduct
review of certification requirements in order to: determine those which might be replaced
by certifications or assurances of compliance with national policies; identify those for which institutional
assurances might be more appropriate (via electronic means if possible) than grant-by
grant assurances; prepare a policy, for incorporation into the appropriate government-wide
document, that directs agencies to impose agency-specific certification requirements only
when required by law or if the agency head determines that there is added value that
justifies using certifications rather than assurances; recommend necessary changes
(including possible legislative changes) in current certification requirements. This
action may implicate more than universities and the agencies that fund them, and
appropriate government entities will be consulted as appropriate. The results of the
review and recommendations should be issued within twelve months of this report.
Promoting Excellent Science and Environmental Stewardship
Issue: Over the past few decades the Federal government has
established national environmental standards applicable to all sectors of the U.S.
economy. Some research laboratories and industrial firms have developed tailored,
laboratory-based environmental and safety management systems that sometimes
exceed the relevant state and Federal levels of protection required by law, even resulting
in lower cost, improved research productivity, improved employee safety and health, and
better protection for the environment. Implicit in this approach is the recognition that
ensuring safety and environmental protection is not just a matter of compliance with
regulations, but is consistent with "doing good science."
Discussion: Recent environmental, health and safety incidents
at U.S. research laboratories remind the scientific community that excellent science must
also be safe science. Safety and environmental protection measures must be integral to
research activities; every scientist and engineer is responsible for designing such
measures into their research and for ensuring that students working with them
are educated and protected about the risks involved in working in a laboratory. Scientists, engineers, and research laboratories funded by
the government should strive to be exemplary in this regard.
Many industrial firms have adopted environmental standards that are more stringent than
state and Federal environmental regulations, with research laboratories following suit,
adopting protocols that are tailored to the working practices of their individual
organizations and that ensure that relevant regulations are met. Examples include the
adoption of "microscale chemistry" techniques that can reduce the quantity of
resources needed and waste generated by an order of magnitude or more. By basing decisions
and operating procedures on the full life-cycle cost, these laboratories have been able to
create a research environment that improves worker safety and stretches limited research
dollars by greatly reducing the need to dispose of and remediate wastes.
The Federal government recently has instituted a number of pilot programs that enable
compliance with various environmental rules and regulations through a more flexible,
tailored, and systemic approach that targets waste reduction, safety, and environmental
protection rather than specific regulations, one by one. Such programs are a step in the
right direction, but they will only reach their full potential when they are expanded and
when a streamlined application process is instituted for them. Moreover, the Federal
government needs to do more to incorporate the lessons learned from these experiments into
new and revised Federal environmental regulations, which would lead to the creation of
more responsive, tailored, and effective programs for environmental, health, and safety
This issue has been analyzed by a number of organizations, including the
Government-University-Industry Research Roundtable, which convened a meeting on the
subject in 1991 of health and safety officers from university, industry, and government
laboratories. The Roundtable concluded that means of improving waste-handling methods for
research laboratories should be investigated that would reduce the volume of waste,
eliminate nonproductive requirements, increase awareness about the importance of proper
waste management, and enhance communication among all relevant parties. The NSTC considers
this an important issue and believes that the establishment of an ongoing dialogue between
research performers, state and Federal regulators, and the Federal agencies that support
scientific research would be a productive way to disseminate these best practices and to
identify any barriers to the adoption of these best practices. Any barriers that are the
result of Federal environmental laws should be documented and resolved as these Federal
laws come up for their periodic renewal.
|ACTION: Strengthen Environmental Protection
in Research Laboratory Setting
- After consulting with the appropriate agencies, the NSTC will
determine the best way to organize discussion among the nations universities,
Federal and industrial research laboratories, Federal and state regulators, and Federal
science agencies to identify best practices for integrating environment, safety, and
health responsibilities with the conduct of research. This discussion would serve as a
forum for disseminating best practices to a wider community. It would also serve as a
forum for identifying lessons learned and impediments to the adoption of these practices
that should be incorporated into new and revised Federal and state regulations. This forum
should be established within twelve months of the issuance of this report, and annual
progress reports should be produced, demonstrating progress.