What Are They and How Does Cutting F&A Hurt the Individual Investigator?

F&A costs, also referred to as indirect costs, have come under fire since President Trump released his so-called skinny budget in May 2017. When released, the budget called for a $7.7 billion cut in NIH’s budget. The budget proposed that significant reductions will come from slashing the overhead payments that NIH now pays to universities on top of the direct research costs for a project. These indirect costs, which are paid at rates now negotiated between individual institutions and the government, currently comprise about 30% of NIH’s total grant funding. The variable indirect cost rates would be replaced with a uniform rate of 10% of total research costs for all NIH grants to reduce paperwork and “the risk for fraud and abuse,” states a budget document for the Department of Health and Human Services (HHS).

What Are F&A Costs?

Federal funding for research includes

  • Direct costs – personnel, supplies, equipment, and travel
  • Facilities and administrative costs – the cost of research facilities, compliance, and the administration of a grant through its lifecycle

These costs cannot be viewed separately. Together they represent the total costs of performing research.

Research institutions provide the physical infrastructure where research is conducted

(i.e., facilities – the “F” in F&A). This includes construction and maintenance of specialized facilities and laboratories that support diverse research, such as the study of serious and potentially lethal agents, advanced robotics, and critical vaccines. F&A costs also provide key operations infrastructure such as utilities, high-speed data processing, libraries, depreciation, radiation and chemical safety, and other facility-related activities.

The administrative (i.e., the “A” in F&A) component includes those costs related to administrative and compliance activities required to conduct federally sponsored research, including human and animal research review boards, financial reporting and purchasing, training and education, managing potential conflicts of interest, financial management, including accountability for research time charged to federal awards, and the personnel and related costs to comply with other federal, state, and local requirements. It is as basic as turning on the lights and as complex as supporting the disposal of biohazardous materials like anthrax. With federally supported research, the institution takes on the responsibility and risk, and provides both the facilities and compliance support necessary for the investigator to conduct research.

Does Cutting F&A Affect the Individual Investigator?

Make no mistake, significantly cutting or mandating a uniform, capped rate for F&A will directly impact research grant funding. If the Administration’s proposal to reduce NIH support for F&A moves forward, it will make research unaffordable for many institutions and ultimately lead to less research carried out across the country. Even for those institutions who continue to conduct research, it is unrealistic to expect that they would be able to operate at the same capacity, much less absorb the lost opportunity from institutions closing their research programs. This would have a disproportionate effect on young investigators.


The CLS has joined with organizations and universities to educate Congress and the Administration on the importance of F&A costs.  Here is a look at those efforts in addition to links to important resources.