5 ms·

> For those who are questioning the validity of a 59% (or higher for some other institutions) overhead rate, your concerns are worth hearing and a review could

> For those who are questioning the validity of a 59% (or higher for some other institutions) overhead rate, your concerns are worth hearing and a review could be necessary, but oh my please not like this. This was an overnight (likely illegal!) change made with no warning and no consultation. Why should the public believe that procedures that produced 59% overhead rates in the first place can be trusted to fix those overhead rates now? Sounds like a demand for an opportunity to derail needed reform by drowning it in red tape. Also, what would be illegal about the change? Are the overhead rates in a statute somewhere? The grants certainly aren’t individually appropriated by Congress.

mlyle 2y ago
> Also, what would be illegal about the change? Are the overhead rates in a statute somewhere? The grants certainly aren’t individually appropriated by Congress. 2024 appropriations (and it showed in many years before then-- Public Law 118-47. Statutes at Large 138 (2024): 677. SEC. 224. In making Federal financial assistance, the provisions relating to indirect costs in part 75 of title 45, Code of Federal Regulations, including with respect to the approval of deviations from negotiated rates, shall continue to apply to the National Institutes of Health to the same extent and in the same manner as such provisions were applied in the third quarter of fiscal year 2017. None of the funds appropriated in this or prior Acts or otherwise made available to the Department of Health and Human Services or to any department or agency may be used to develop or implement a modified approach to such provisions, or to intentionally or substantially expand the fiscal effect of the approval of such deviations from negotiated rates beyond the proportional effect of such approvals in such quarter.
- rayiner 2y ago
  That says the indirects must be based on the existing regulations. The memo purports to rely on the existing regulations. It relies on 45 CFR §75.414(c)(1), which states: > The negotiated rates must be accepted by all Federal awarding agencies. An HHS awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section. Subsection (c)(3), in turn, says: > (3) The HHS awarding agency must implement, and make publicly available, the policies, procedures and general decision making criteria that their programs will follow to seek and justify deviations from negotiated rates. Just based on a quick perusal it seems like the administration has a decent argument that the agency head can approve the 15% indirect by fiat as long as he or she comes up with a documented justification.
  - mlyle 2y ago
    https://goodscience.substack.com/p/indirect-costs-at-nih https://goodscience.substack.com/p/indirect-costs-at-nih This reads that argument in the exact opposite direction: > So, an HHS division like NIH can use a different rate only for a “class” of grants or a “single” grant, and only with “documented justification.” > There is nothing that says NIH could, in one fell swoop, overturn literally every negotiated rate agreement for 100% of all grants with all medical and academic institutions in the world, with the only justification being “foundations do it” rather than any costing principle whatsoever from the rest of Part 75 of 45 C.F.R. Further, this doesn't allow a blanket adjustment to existing awards.
    - rayiner 2y ago
      That is an argument in the opposite direction, but it overlooks two things. 1) The “documented justification” must reflect the requirements of subsection (c)(3), but that provision imposes no real substantive requirements. It’s a litigable, but the linked article concludes there must be more justification than the statute seems to require. Note also that, amusingly, Kisor is still the law of the land and under that decision agencies still get deference in interpreting their own regulations. 2) The article frames the Congressional rider as prohibiting changes to the indirects. But the statute only prohibits changing the regulation, which HHS hasn’t done.
      - mlyle 2y ago
        This is a pretty twisted reading; it basically is a reading of the statute that it has no effect or any kind of restraint at all. We'll see what happens.
        tlb 2y ago
        The purpose of many laws is to require documentation without imposing any new limits on what the government can do.
        rayiner 2y ago
        The statute just says the agency must use the existing regulations. The regulations were promulgated by the agency to govern its own discretion. The executive reads the regulation to constrain the civil service to a particular process, but allow the negotiated indirects to be overridden by the head of the agency with a documented reason. You’re assuming that the regulation would constrain the head of the agency but why would that be the case?
skwb 2y ago
> Also, what would be illegal about the change? At the *very* least you should be following the administrative rules act (requiring you to solicit 45 days for comments by effected parties) before making such a dramatic change in policy. Courts absolutely love striking down EOs (of both Dems and Reps Admins) when they should have been following the administrative rules act.
- rayiner 2y ago
  You can file an APA lawsuit about anything. Nobody really calls APA violations “illegal.” It’s a “show your work” and “don’t be drunk or crazy” procedural law.
  - skwb 2y ago
    The fact that courts do strike down admins on violating the APA does, in fact, make it illegal.
  - jhp123 2y ago
    DACA repeal was blocked on APA grounds
colincooke 2y ago
1. Why should the public believe that they can fix it. Perhaps they can't, that's not entirely my point. My point is that if the government firmly believes that a change is necessary there are _simple_ ways of acheiving such a change without causing such chaos, waste, and hardship. Perhaps a phased in approach, or other mechanisms. Overnight shock therapy offers very little economic benefits while having very harsh personal and insitutional cost. 2. What is illegal about the change. The NIH overhead rate is actually negotiated directly between the institution and the NIH, following a process put into law. This is why a federal judge has blocked this order [1]. I'm far from a lawyer, but my read of this is that this is a change that would need to come through congress or a re-negotiation of the rates through the mandated process. [1]: https://www.aamc.org/news/press-releases/aamc-lawsuit-results-nationwide-temporary-restraining-order-proposed-drastic-cuts-nih-funding https://www.aamc.org/news/press-releases/aamc-lawsuit-result...
BenFranklin100 2y ago
You seem to be unfamiliar with how indirect rates work. First some basic math: if a project is budgeted at a direct cost of $500,000, the indirect rate of 60% applies to the $500,000, i.e. $300,000. The total grant is thus $500K + $300K = $800K. The $300K indirect costs are thus 37.5% of the total. This is an upper limit, as many direct costs such as equipment do not get indirect rates applied to them. Second, these rates are painstakingly negotiated with the NSF and NIH. Yearly audits to ensure compliance must be passed if funding is to continue. Third, these indirect cost go towards to items such as electricity, heat, building maintenance, safety training and compliance, chemical disposal, and last by not least laboratory support services such as histology labs, proteomics core, compute infrastructure, and some full time staff scientific staff. Only a relatively small portion goes to administration. Finally, scientists generally would welcome review and reform of indirect costs to ensure they get the maximize benefit from the indirect rates. However, DOGE is not interested in reform. They are interested in raze and burn destruction. If DOGE gets its way, it will knock the Unites States off its perch as the world’s technological leader.
- a2tech 2y ago
  You can tell people the truth all day long. They don’t want to hear it. They’re convinced that academia is rotten to the core and none of your facts and figures will dissuade them. For example I know at my institution every dollar, every piece of effort, is painstakingly tracked and attributed to funding sources. We have extensive internal checks to make sure we aren’t misusing funds. Audits happen at every major milestone. All of that effort is reported. It’s exhausting but the government requires it because we have to be good stewards of the funds we have been granted. No one believes it.
  - BenFranklin100 2y ago
    We must keep trying. It’s frustrating but we can’t give up. Scientific progress depends on us.
  - addicted 2y ago
    I’m not part of academia but was heavily involved in funding because of my position in student government while still in college. While I won’t argue there isn’t waste (what endeavor doesn’t have waste?) it’s an incredibly tiny percentage (except in cases where there was actual fraud, which we also discovered and the Feds prosecuted and convicted people for). The irony is that academia is so afraid of “waste” that I wouldn’t be surprised if colleges spend more money on the auditing and the compliances, etc than the actual waste they prevent.
addicted 2y ago
The “overhead” isn’t even overhead as most people understand it. But the real question is why does the general public think 59% is too high? Irs an arbitrary number. Maybe an appropriate level of “overhead” is 1000%. In reality the people who actually know anything about how this is calculated, across the board and across the political spectrum, do not think this is a major concern at all. The only people who are complaining about it are the ones who hear the word overhead, have no concept of what it means other than taking a lay persons understanding that all overhead is unnecessary and are coming with the idea that anything above 0% is bad.
- ModernMech 2y ago
  This is really it. Generally they gesture vaguely toward a notion of "administrative and bureaucratic overhead", without really understanding how that overhead actually cuts waste and improves research output by removing redundancies. If we were to zero out this administrative overhead, it would mean every professor would end up doing less research and more not-research.
- rayiner 2y ago
  Were the people at HHS who tried to reduce indirect costs in 2013 during the Obama administration also not the “people who actually know anything?” https://archive.ph/2025.01.09-171418/https://www.bostonglobe.com/news/nation/2013/03/17/harvard-mit-and-other-research-schools-thwart-obama-administration-effort-cap-overhead-payments/Nk5PT0Mc8MQZihFVNs5gNK/story.html https://archive.ph/2025.01.09-171418/https://www.bostonglobe... I bet the “people who actually know anything” at Boeing would also say their launch costs are as low as they can go and there’s nothing to cut.
  - selimthegrim 2y ago
    It seems like the better comparison from your article would be 1992, but really, having RFK Junior sitting there with a chainsaw is in no way comparable to 2013
    - rayiner 2y ago
johnnyanmac 2y ago
>Also, what would be illegal about the change? Besides the president screwing with the budget agreed upon by Congress that kicked all this off?
amluto 2y ago
I’m not convinced that the rate, per se, is actually a problem. What is a problem is the structure. If a contract said “you get $1M to do X and your university gets $590k, paid pro rata by time until completion”, fine, and one could quibble about the rates. Instead, the grant is for $1.59M, and each individual charge to the grant pays an extra 59% to the university, conditionally, depending on the type of charge and the unbelievably messed up rules set by the university in concert with the government. Buying a $4000 laptop? Probably costs your grant balance $6360. Buying a $5000 laptop? Probably costs $5000 becuase it’s “capital equipment” or “major equipment” and is thus exempt. Guess who deliberately wastes their own and this also the university’s and government’s money by deliberately buying unnecessarily expensive stuff? It gets extra fun when the same research group has grants from different sources with different overhead rates: costs are allocated based on whether they are exempt from overhead! And cost-plus disease is in full effect, too. If the research group doesn’t use all their awarded money because the finish the project early or below estimated cost, the university doesn’t get paid their share of the unspent money. This likely contributes to grantees never wanting to leave money unspent. Of course, DOGE isn’t trying to fix any of the above.
plantwallshoe 2y ago
If they can’t be trusted to fix the problem themselves with a 5 year phase in period they most definitely can’t be trusted to fix the problem immediately…so I don’t get your point.
- rayiner 2y ago
  Everyone involved in the current process has an incentive to not change anything. If you go through the existing process with some five year target, the universities and bureaucrats will bleed you to death with procedures and lawsuits and lobbying, as they did with prior efforts under Obama. It’s the same way NIMBYs kill development projects. The only way to change it is shock and awe.
  - plantwallshoe 2y ago
    What article are we taking about? The response to “shock and awe” was rescind offers to students, not cut down on administrators or address inefficiencies.
    - rayiner 2y ago
      That’s a temporary measure. The universities know that in he long run they need students but can cut administrators. But at least the immediate reaction is controlling costs rather than geering up to lobby and litigate their way out of it.
      - sudosysgen 2y ago
        The US has a peculiar culture where elite academic institutions are very much willing to limit their numbers of students, so it's not clear to me that they will in the long run control costs. Large, prestigious US universities have historically preferred funding more administrators over more students.
        ModernMech 2y ago
        Those elite universities are less like schools and more like towns, so the focus is not just on teaching students but on maintaining a community. Sometimes that means protecting the people you have at the expense of people you haven't met yet. In many cases, "more administrators" translates to "better town services", so it's nor surprising to me the preference to cut enrollment.
no-thank-you 2y ago
I'm curious about where you would draw the line on government workforce/spending reductions. What specific cost-cutting measures would go too far and make you withdraw support from Trump/MAGA-related initiatives? For example: - Complete elimination of federal workforce (RAGE) - Full military withdrawal from NATO/Europe - Dramatic cuts to essential services (eg, Social Security) What potential actions would make you feel the downsides outweigh any benefits? I'm curious what your threshold is for acceptable vs. unacceptable changes.

mlyle 2y ago

> Also, what would be illegal about the change? Are the overhead rates in a statute somewhere? The grants certainly aren’t individually appropriated by Congress. 2024 appropriations (and it showed in many years before then-- Public Law 118-47. Statutes at Large 138 (2024): 677. SEC. 224. In making Federal financial assistance, the provisions relating to indirect costs in part 75 of title 45, Code of Federal Regulations, including with respect to the approval of deviations from negotiated rates, shall continue to apply to the National Institutes of Health to the same extent and in the same manner as such provisions were applied in the third quarter of fiscal year 2017. None of the funds appropriated in this or prior Acts or otherwise made available to the Department of Health and Human Services or to any department or agency may be used to develop or implement a modified approach to such provisions, or to intentionally or substantially expand the fiscal effect of the approval of such deviations from negotiated rates beyond the proportional effect of such approvals in such quarter.

rayiner 2y ago
That says the indirects must be based on the existing regulations. The memo purports to rely on the existing regulations. It relies on 45 CFR §75.414(c)(1), which states: > The negotiated rates must be accepted by all Federal awarding agencies. An HHS awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section. Subsection (c)(3), in turn, says: > (3) The HHS awarding agency must implement, and make publicly available, the policies, procedures and general decision making criteria that their programs will follow to seek and justify deviations from negotiated rates. Just based on a quick perusal it seems like the administration has a decent argument that the agency head can approve the 15% indirect by fiat as long as he or she comes up with a documented justification.
- mlyle 2y ago
  https://goodscience.substack.com/p/indirect-costs-at-nih https://goodscience.substack.com/p/indirect-costs-at-nih This reads that argument in the exact opposite direction: > So, an HHS division like NIH can use a different rate only for a “class” of grants or a “single” grant, and only with “documented justification.” > There is nothing that says NIH could, in one fell swoop, overturn literally every negotiated rate agreement for 100% of all grants with all medical and academic institutions in the world, with the only justification being “foundations do it” rather than any costing principle whatsoever from the rest of Part 75 of 45 C.F.R. Further, this doesn't allow a blanket adjustment to existing awards.
  - rayiner 2y ago
    That is an argument in the opposite direction, but it overlooks two things. 1) The “documented justification” must reflect the requirements of subsection (c)(3), but that provision imposes no real substantive requirements. It’s a litigable, but the linked article concludes there must be more justification than the statute seems to require. Note also that, amusingly, Kisor is still the law of the land and under that decision agencies still get deference in interpreting their own regulations. 2) The article frames the Congressional rider as prohibiting changes to the indirects. But the statute only prohibits changing the regulation, which HHS hasn’t done.
    - mlyle 2y ago
      This is a pretty twisted reading; it basically is a reading of the statute that it has no effect or any kind of restraint at all. We'll see what happens.
      - tlb 2y ago
        The purpose of many laws is to require documentation without imposing any new limits on what the government can do.
      - rayiner 2y ago
        The statute just says the agency must use the existing regulations. The regulations were promulgated by the agency to govern its own discretion. The executive reads the regulation to constrain the civil service to a particular process, but allow the negotiated indirects to be overridden by the head of the agency with a documented reason. You’re assuming that the regulation would constrain the head of the agency but why would that be the case?

skwb 2y ago

> Also, what would be illegal about the change? At the *very* least you should be following the administrative rules act (requiring you to solicit 45 days for comments by effected parties) before making such a dramatic change in policy. Courts absolutely love striking down EOs (of both Dems and Reps Admins) when they should have been following the administrative rules act.

rayiner 2y ago
You can file an APA lawsuit about anything. Nobody really calls APA violations “illegal.” It’s a “show your work” and “don’t be drunk or crazy” procedural law.
- skwb 2y ago
  The fact that courts do strike down admins on violating the APA does, in fact, make it illegal.
- jhp123 2y ago
  DACA repeal was blocked on APA grounds

colincooke 2y ago

1. Why should the public believe that they can fix it. Perhaps they can't, that's not entirely my point. My point is that if the government firmly believes that a change is necessary there are _simple_ ways of acheiving such a change without causing such chaos, waste, and hardship. Perhaps a phased in approach, or other mechanisms. Overnight shock therapy offers very little economic benefits while having very harsh personal and insitutional cost. 2. What is illegal about the change. The NIH overhead rate is actually negotiated directly between the institution and the NIH, following a process put into law. This is why a federal judge has blocked this order [1]. I'm far from a lawyer, but my read of this is that this is a change that would need to come through congress or a re-negotiation of the rates through the mandated process. [1]: https://www.aamc.org/news/press-releases/aamc-lawsuit-results-nationwide-temporary-restraining-order-proposed-drastic-cuts-nih-funding https://www.aamc.org/news/press-releases/aamc-lawsuit-result...

BenFranklin100 2y ago

You seem to be unfamiliar with how indirect rates work. First some basic math: if a project is budgeted at a direct cost of $500,000, the indirect rate of 60% applies to the $500,000, i.e. $300,000. The total grant is thus $500K + $300K = $800K. The $300K indirect costs are thus 37.5% of the total. This is an upper limit, as many direct costs such as equipment do not get indirect rates applied to them. Second, these rates are painstakingly negotiated with the NSF and NIH. Yearly audits to ensure compliance must be passed if funding is to continue. Third, these indirect cost go towards to items such as electricity, heat, building maintenance, safety training and compliance, chemical disposal, and last by not least laboratory support services such as histology labs, proteomics core, compute infrastructure, and some full time staff scientific staff. Only a relatively small portion goes to administration. Finally, scientists generally would welcome review and reform of indirect costs to ensure they get the maximize benefit from the indirect rates. However, DOGE is not interested in reform. They are interested in raze and burn destruction. If DOGE gets its way, it will knock the Unites States off its perch as the world’s technological leader.

a2tech 2y ago
You can tell people the truth all day long. They don’t want to hear it. They’re convinced that academia is rotten to the core and none of your facts and figures will dissuade them. For example I know at my institution every dollar, every piece of effort, is painstakingly tracked and attributed to funding sources. We have extensive internal checks to make sure we aren’t misusing funds. Audits happen at every major milestone. All of that effort is reported. It’s exhausting but the government requires it because we have to be good stewards of the funds we have been granted. No one believes it.
- BenFranklin100 2y ago
  We must keep trying. It’s frustrating but we can’t give up. Scientific progress depends on us.
- addicted 2y ago
  I’m not part of academia but was heavily involved in funding because of my position in student government while still in college. While I won’t argue there isn’t waste (what endeavor doesn’t have waste?) it’s an incredibly tiny percentage (except in cases where there was actual fraud, which we also discovered and the Feds prosecuted and convicted people for). The irony is that academia is so afraid of “waste” that I wouldn’t be surprised if colleges spend more money on the auditing and the compliances, etc than the actual waste they prevent.

addicted 2y ago

The “overhead” isn’t even overhead as most people understand it. But the real question is why does the general public think 59% is too high? Irs an arbitrary number. Maybe an appropriate level of “overhead” is 1000%. In reality the people who actually know anything about how this is calculated, across the board and across the political spectrum, do not think this is a major concern at all. The only people who are complaining about it are the ones who hear the word overhead, have no concept of what it means other than taking a lay persons understanding that all overhead is unnecessary and are coming with the idea that anything above 0% is bad.

ModernMech 2y ago
This is really it. Generally they gesture vaguely toward a notion of "administrative and bureaucratic overhead", without really understanding how that overhead actually cuts waste and improves research output by removing redundancies. If we were to zero out this administrative overhead, it would mean every professor would end up doing less research and more not-research.
rayiner 2y ago
Were the people at HHS who tried to reduce indirect costs in 2013 during the Obama administration also not the “people who actually know anything?” https://archive.ph/2025.01.09-171418/https://www.bostonglobe.com/news/nation/2013/03/17/harvard-mit-and-other-research-schools-thwart-obama-administration-effort-cap-overhead-payments/Nk5PT0Mc8MQZihFVNs5gNK/story.html https://archive.ph/2025.01.09-171418/https://www.bostonglobe... I bet the “people who actually know anything” at Boeing would also say their launch costs are as low as they can go and there’s nothing to cut.
- selimthegrim 2y ago
  It seems like the better comparison from your article would be 1992, but really, having RFK Junior sitting there with a chainsaw is in no way comparable to 2013
  - rayiner 2y ago

johnnyanmac 2y ago

>Also, what would be illegal about the change? Besides the president screwing with the budget agreed upon by Congress that kicked all this off?

amluto 2y ago

I’m not convinced that the rate, per se, is actually a problem. What is a problem is the structure. If a contract said “you get $1M to do X and your university gets $590k, paid pro rata by time until completion”, fine, and one could quibble about the rates. Instead, the grant is for $1.59M, and each individual charge to the grant pays an extra 59% to the university, conditionally, depending on the type of charge and the unbelievably messed up rules set by the university in concert with the government. Buying a $4000 laptop? Probably costs your grant balance $6360. Buying a $5000 laptop? Probably costs $5000 becuase it’s “capital equipment” or “major equipment” and is thus exempt. Guess who deliberately wastes their own and this also the university’s and government’s money by deliberately buying unnecessarily expensive stuff? It gets extra fun when the same research group has grants from different sources with different overhead rates: costs are allocated based on whether they are exempt from overhead! And cost-plus disease is in full effect, too. If the research group doesn’t use all their awarded money because the finish the project early or below estimated cost, the university doesn’t get paid their share of the unspent money. This likely contributes to grantees never wanting to leave money unspent. Of course, DOGE isn’t trying to fix any of the above.

plantwallshoe 2y ago

If they can’t be trusted to fix the problem themselves with a 5 year phase in period they most definitely can’t be trusted to fix the problem immediately…so I don’t get your point.

rayiner 2y ago
Everyone involved in the current process has an incentive to not change anything. If you go through the existing process with some five year target, the universities and bureaucrats will bleed you to death with procedures and lawsuits and lobbying, as they did with prior efforts under Obama. It’s the same way NIMBYs kill development projects. The only way to change it is shock and awe.
- plantwallshoe 2y ago
  What article are we taking about? The response to “shock and awe” was rescind offers to students, not cut down on administrators or address inefficiencies.
  - rayiner 2y ago
    That’s a temporary measure. The universities know that in he long run they need students but can cut administrators. But at least the immediate reaction is controlling costs rather than geering up to lobby and litigate their way out of it.
    - sudosysgen 2y ago
      The US has a peculiar culture where elite academic institutions are very much willing to limit their numbers of students, so it's not clear to me that they will in the long run control costs. Large, prestigious US universities have historically preferred funding more administrators over more students.
      - ModernMech 2y ago
        Those elite universities are less like schools and more like towns, so the focus is not just on teaching students but on maintaining a community. Sometimes that means protecting the people you have at the expense of people you haven't met yet. In many cases, "more administrators" translates to "better town services", so it's nor surprising to me the preference to cut enrollment.

no-thank-you 2y ago

I'm curious about where you would draw the line on government workforce/spending reductions. What specific cost-cutting measures would go too far and make you withdraw support from Trump/MAGA-related initiatives? For example: - Complete elimination of federal workforce (RAGE) - Full military withdrawal from NATO/Europe - Dramatic cuts to essential services (eg, Social Security) What potential actions would make you feel the downsides outweigh any benefits? I'm curious what your threshold is for acceptable vs. unacceptable changes.