The costs of research performed by universities and the appropriate sharing of these costs be- 

 tween the universities and the Federal government have long been a source of controversy. The 

 Federal government makes payments to universities for the indirect costs of research. However, 

 specific policies have varied and some controversy stems from differences in purposes of re- 

 search funding by Federal agencies. In many cases, agencies are procuring specific research ser- 

 vices or products from the universities. In others, the principal purpose is to underwrite university 

 research and research infrastructure; in the latter case it is reasonable that the universities share 

 the costs as well as the benefits of the investment. 



Federal reliance on cost-sharing and leveraging arrangements with universities has increased. 

 These arrangements frequently serve as a requirement for the applicant's inclusion in competition 

 for funding. Requirements for sharing of costs of research by academia and other sectors help to 

 conserve limited Federal funds at the same time that they assure real commitment to the project 

 by the other participants. However, such cost sharing requirements can result in long-term finan- 

 cial obligations that may exert pressures on other university missions. 



RECOMMENDATIONS 



• The Federal government and RIUs should work together to assess and clarify the respec- 

 tive responsibilities of universities and agencies in supporting human and physical 

 academic infrastructure. 



• The Federal government should systematically review and, if necessary, clarify and 

 simplify cost sharing guidelines and principles in major research projects with univer- 

 sities. 



• As a counterpart to greater clarity and predictability on the part of the Federal govern- 

 ment, the universities should establish accounting systems that adhere to common stand- 

 ards and facilitate the identification of the costs of research. 



Reliance on excellence and competitive merit review by peers as the basis for decisions to 

 support research assures the continued quality of U.S. scientific and technical research. 



RECOMMENDATIONS 



• The Federal agencies should strengthen and expand their reliance on merit review in 

 funding decisions for science and engineering research. 



• In recognition of the growing burden of the review process on the academic community. 

 Federal agencies should simplify their award procedures and make their requirements 

 more uniform where appropriate. 



