Letter from Andrew Hamilton to HHS Secretary Price and OMB Director Mulvaney Opposing Cuts to Federal Support for Indirect Research Costs


Letter from Andrew Hamilton to HHS Secretary Price and OMB Director Mulvaney Opposing Cuts to Federal Support for Indirect Research Costs

Andrew Hamilton
NYU President Andrew Hamilton

June 26, 2017
The Honorable Mick Mulvaney
Director, White House Office of Management & Budget
725 17th Street NW
Washington, DC 20503

The Honorable Thomas Price
Secretary, U.S. Department of Health and Human Services
200 Independence Ave SW
Washington, DC 20201

Dear Director Mulvaney and Secretary Price:

On behalf of the New York University (NYU) community, I am writing in opposition to the 10- percent cap for facilities and administrative (F&A) costs on National Institutes of Health (NIH) grants that was included as part of the Administration’s FY 2018 Budget Proposal.

New York University is a member of the Association of American Universities (the 60 leading U.S. research institutions) and is a Carnegie Research 1 designated institution (“highest research activity”). As such, our core mission – in addition to educating young people – is creating new
knowledge, from basic to applied. From biology to medicine, from chemistry to pharmacology, from physics to engineering, NYU faculty and researchers conducted over $350 million in federally funded research and development projects that helped advance science, human health, and technology in FY 2016.

The results of academic research, along with NYU’s institutional commitment to R&D, which includes funding and promulgating a culture of entrepreneurship, lead to the development of new technologies and cures, which in turn drive economic growth and job creation. As a measure: over 100 companies have been created based on NYU technologies, and our institution ranks first among all U.S. universities in income from technology licensing, which is then plowed back into further research. In addition, over the past 5 years, NYU has created 50% more new start-up companies per research dollar expended than the national average.

It is against this backdrop, and my own four decades as a working scientist, that I write you today. The Administration’s proposal to cap F&A costs would have a devastating impact on the ability of NYU and its fellow research institutions to conduct health and biomedical research that leads to advances in medical treatments and cures.

As background, F&A costs are real, identifiable, quantifiable, and audited costs that represent the research infrastructure and operating expenses incurred by universities that are integral to conducting quality research: F&A costs reimburse utilities, high-speed data processing and storage, hazmat waste disposal, security of select substances, radiation and chemical safety activities, and other infrastructure activities. In addition, they help to pay for the administration of research awards to ensure compliance with the myriad of federal regulatory requirements that govern the use of the funding, such as those involving human subjects, conflict of interest, responsible conduct of research, etc.

As a university president -- and as a chemist whose own research career owes its success to the NIH’s R01 grant program -- I can assure you that F&A costs, no matter how unglamorous, are integral to keeping America at the forefront of scientific discovery.

There is an old military saying: armchair generals talk strategy; real generals talk logistics.

The outcome of any great enterprise – be it battle or scientific discovery – relies not only on the most conspicuous aspects, but also on the quiet, un-dramatic, but highly important, work of establishing a foundation for success. For that reason, and in recognition of the role universities have shouldered since the mid-20th century in advancing the U.S. research agenda, our government has long been committed to providing fair, adequate F&A support. That the federal government has supported research, including F&A support, and that the U.S. is the world leader
in science, technology, and economic might is not a coincidence.

And let’s be clear about the consequences of drastically cutting that support now: the burden of those cuts will not be solved through “belt-tightening.” The very real cost to universities of facilities and equipment to conduct research will remain regardless of whether the cuts are implemented. Even now, with F&A levels set where they are, NYU spends over $35 million annually in unreimbursed costs from NIH research alone. Nationally, nearly $5 billion per year is spent by universities to subsidize unreimbursed F&A costs associated with federal research.

If you move forward with shifting yet more of these costs to universities, there will be, therefore, one of two outcomes: less research, or less money available for meeting our educational mission. Either of these would be highly damaging or regrettable outcomes, hobbling us now and in the future, and giving other nations the opportunity to seize the lead position from us in science and research or in having a highly educated populace.

We have seen the result of approaches like this in the military in the past: even as new, costly weapons systems were put in place, we starved other, less showy parts of the budget that purchased ammunition, spare parts, and fuel, with the result that readiness steadily declined.

The outcome will not be different in this instance.

The partnership between the federal government and research universities is world renowned for its productivity and innovation— it has advanced human health, produced great prosperity, and enhanced our national security. With this successful history in mind, the NYU Community urges the administration and Congress to continue to provide stable and consistent funding for the entire spectrum of research infrastructure and activities necessary to continue to make advances in improving the nation’s public health.

Please feel free to contact me or the leadership of the Association of American Universities (AAU) should you have questions or seek additional information. Thank you for your consideration.

 

Sincerely,
Andrew Hamilton
President
New York University

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