October 6, 2003

\*sent via electronic mail to\*

Office of Science and Technology Policy

1650 Pennsylvania Avenue, N.W.

Washington, D.C. 20502

ATTENTION: Michael J. Holland

SUBJECT: NSTC Research Business Models Comments

Dear Mike:

I am pleased to provide Stanford University's response to the August 6,
2003 Federal Register notice requesting input for the OSTP Subcommittee
on Research Business Models. We understand that this new subcommittee
will review the policies, procedures and plans related to the business
relationship between federal agencies and research performers with the
goal of improving performance and management of federally funded
sponsored basic and applied scientific and engineering research.

In preparation of our response, Stanford solicited comments from
approximately 60 key members of our research enterprise, including
research deans, principal investigators, and research administrators.
Input was provided via written comment, individual interview, and
through two facilitated campus sessions. The latter were designed to
permit researchers and research administrators to jointly articulate a
desired future state of research and to identify strategies to help us
move closer to that desired state. Major barriers impeding federally
funded research were also catalogued.

Overall, much of the feedback provided by the Stanford Research
community echo recommendations found in the Presidential Review
Directive -- 4 report. While some recommendations from that report have
already been implemented, many remain to be fully achieved. We suggest
that the PRD-4 serve as a key resource for the Subcommittee to identify
those principles and action items of critical importance to the
university research community. We also suggest that the subcommittee
take advantage of the work of the Federal Demonstration Partnership
(FDP) and, in particular, the FDP Initiative to Reduce Administrative
Burden (IRAB) Task Force.

The areas of opportunity identified by Stanford as most critical to
address include the following:

(1) **Create Articulated Principles for Research Partnership**

While recognizing the value of a diverse funding community, we
nonetheless see the lack of underlying business principles as a
significant obstacle to an effective partnership. At the present time,
no common underlying agreement exists among federal agencies, the audit
community, and the university research community defining the acceptable
principles and business standards for the conduct of research. This
deficiency is reflected in such areas as the lack of an overarching
principle governing the overall reimbursement of costs for research; in
the lack of agreement as to the standards or norms against which an
institution is audited; in the extraordinary diversity among federal
agencies in proposal, peer review, and award business practices, terms
and conditions and interpretation of requirements; complexities
surrounding F&A rate negotiations; varying interpretations concerning
the dual roles of students; and in the disagreements about what
constitutes acceptable mechanisms to allocate costs, to name just a few.

This lack of agreement results both in tremendous effort for
investigators, program officers and grant and contract officials to
track and enforce the myriad of requirements, and results in uncertainty
on the part of researchers and university administrative officials about
what constitutes an appropriate level of compliance. Faculty can feel
they are personally at risk as they try to decide the appropriate level
of compliance, which results in their spending significant time on
identifying (often small) alternative fund sources to cover less routine
research costs, or in moving their research portfolio to the private
sector as a way to avoid perceived financial or other risk. The lack of
clarity makes it profoundly difficult for an institution to accurately
analyze and correct areas of deficiency, and to foster an appropriate
balance between meaningful and material compliance and a responsive,
flexible research enterprise.

To address this core issue, we recommend:

A.  *The federal government, working in close collaboration with the
    University research community, should formalize the key underlying
    principles governing the federal government/ university research
    partnership (e.g, in a new OMB Circular, "A1- The Principles of
    Research Partnership.)* This document should leverage the excellent
    work contained in the PRD-4 and its successor clarifications to OMB
    A-21.

B.  *Federal and inter-university research policies, practices, and
    standards should be aligned with these principles.* New federal
    policies or standards should be reviewed before they are adopted to
    ensure that they are in conformance with these principles. Existing
    federal circulars, policies and practices should be reviewed and
    adjusted within a reasonable period of time. This effort should
    leverage the work of the FDP, particularly its "Initiative to Reduce
    Administrative Burden" Task Force, COGR, and as the national
    research professional organizations (NCURA, SRA, NPMA, etc.), who
    are well positioned to provide leadership in the area of development
    and assessment of inter-organizational standards.

C.  *Agency and institutional best practices, norms and standard
    interpretations built on these principles should be developed by
    federal agencies, university business partners, national research
    administration organizations (e.g., FDP, COGR, NCURA, SRA) and the
    audit community, and broadly disseminated.*

```{=html}
<!-- -->
```
(2) **Refine Approach to Research Facility, Instrumentation and
    Infrastructure Support**

In the performance of research, scientists are increasingly dependent on
complex, multimillion dollar instrumentation that is smaller than the
neutron, synchrotron radiation or high energy facilities. This
instrumentation is usually shared by many investigators from a broad
range of scientific fields who are supported by several different
federal agencies. They are aided by scientists and/or technicians who
are dedicated to maintaining and improving these experimental systems in
an effort to assure that they are used well, well maintained, constantly
at the state-of-the art. This is a highly efficient way of using such
instrumentation that federal policies and practices should encourage.
Unfortunately, funding to support such research infrastructure is
limited, particularly at this mid-range level. Existing research
business models for such major instrumentation, joint-use facilities,
and laboratory renewal are limited and, at times, serve as a deterrent
for collaboration and sharing of vital research resources. "Service
Center" models for major facilities do not allow for adequate fiscal
planning for stability, evolution or replacement, and audit-worthy
business models for allocating acquisition, use, and ongoing maintenance
costs among multiple investigators have proven to be impractical in all
but the most simple sorts of cases. As multi-investigator and
cross-organizational research increase, this issue is expected to become
of even greater concern.

Our recommendations are as follows:

A.  *Federal funding agencies, and university business partners should
    work together to create new policies, practices and business
    arrangements that will foster the development, use and continuous
    improvement of shared facilities/equipment (rather than focusing on
    accounting for their use). Federal funding agencies and universities
    should recognize the importance of their joint role in maintaining
    stable, accessible, state-of-the-art research infrastructures in the
    university community, (including facilities, equipment, and core
    technical personnel) and should evaluate whether their business
    practices can be modified to better support this need* (e.g.,
    development and ongoing maintenance/infrastructure support for
    regional large scale instrumentation or core facilities; allocation
    of core funding for shared facility costs and corresponding decrease
    in the precision of cost allocation to individual research projects;
    change in service center requirements; stable funding for students
    during their graduate tenure; university policies that encourage
    outside academic use of government funded instrumentation;
    development of attractive career ladders and stable funding for key
    technical personnel, etc.) The business arrangements should be
    piloted through the FDP and, if successful, should be broadly
    implemented.

\(3\) **Administrative Support for Researchers**

The cap on recovery of indirect administrative costs, coupled with the
prohibition on direct charging of administrative costs that are directly
related to the research, is causing faculty and other researchers to
spend considerable time on administrative tasks. Most of these tasks
could be performed better by administrative assistants trained to
perform them. This would leave the researchers more time for research
and enhance the productivity of the research enterprise.

Our recommendations are as follows:

> *A. OMB Circular A-21 should be modified to allow the direct charging
> of administrative services directly linked to the performance of the
> research.* The research enterprise is best served when researchers are
> conducting research, and administrators are providing skilled project
> oversight support for their researchers. A reasonable and allocable
> amount of administrative support should be able to be direct charged
> to federal projects. The best way for the federal government to limit
> administrative costs and to provide a stable, competent research
> enterprise is not to prevent administrative costs from being direct
> charged to projects, nor or to cap their reimbursement as indirect
> cost items, but rather to simplify and streamline requirements so that
> the oversight of research can be conducted more efficiently.

**(4) Research at the Borders of Disciplines and Agencies**

Some of the most important and exciting modern research is at the
borders of the disciplines and of the individual agencies\'
responsibilities. Investigators seeking to acquire federal funding for
such endeavors must be knowledgeable about a host of different
individual agency missions and business practices, peer review
preferences, and funding parameters (often tied to
single-investigator/single-project and "big science" projects.) They
find, in addition, that the sophistication of the peer review process
varies among agencies tremendously, as well. Both the federal government
and the universities must continue to refine their methods of dealing
with this, while recognizing the importance of keeping the disciplines
strong and that some agencies funding research have specific missions.

Consequently, we recommend that:

A.  *Federal agencies should re-examine and eliminate existing barriers
    (political and practical) for projects that transcend disciplines
    and specific agency missions*. Business models should be developed
    that would facilitate cross-agency support and minimize the amount
    of time that researchers are required to devote to administrative
    activities (e.g., implementation of common proposal submission
    requirements across agencies, development of common expectations
    about co-PIs, implementation of a single set of terms and conditions
    governing a portfolio of awards, common reporting requirements,
    etc.)

B.  *Federal agencies and universities should work together to become
    more sophisticated and science-focused in their research
    administration practices.* A "stable" of administrative mechanisms
    and expectations should be developed and deployed based on the
    unique needs present in each type of project (e.g., individual
    investigator-led project; individual investigator with a portfolio
    of projects; multiple investigators working on a single project,
    joint funding of a project by multiple funding sources (including
    non-federal) funding a single initiative, or "big-science").

C.  *Federal agencies and universities should consider whether
    "mid-size" science (usually multi-investigator) is adequately
    supported.* Funding for mid-size projects (\$500K - \$1M/year)
    either involving several investigators in a single area or
    cross-disciplines, or projects involving two or several
    investigators in complementary but connected areas is difficult to
    find, and agency personnel seem hesitant to engage in funding
    allocations that cross directorates, institutes, or agencies. In
    addition, these projects are administrative burdensome for both the
    agency and the institution(s) involved, since requirements of
    different agencies are often involved. These projects often require
    considerable coordination to be successful, but existing business
    models for sharing resources are limited, and administrative support
    is typically not able to be directly charged to facilitate the
    process.

D.  *Federal agencies should improve peer review oversight and
    inter-agency communication about project funding.* The degree to
    which peer review is utilized varies tremendously among federal
    agencies, as well as there being a significant variance in the
    degree of sophistication and rigor in peer review systems. It would
    be extremely helpful if peer review was extended more broadly,
    utilizing well-understood and articulated review criteria and
    processes, and identifying and deploying the best practices of the
    leading peer review agencies, NIH and NSF. A common approach to peer
    review will be essential to the success of inter-disciplinary and
    cross-agency funding.

E.  *Federal agencies should work to eliminate barriers caused by
    artificial distinctions between research and education (and public
    service).* In the current research environment, a student receiving
    a stipend on a fellowship may perform identical work to the salaried
    student sitting at the bench next to her, but receive very different
    levels of compensation (including benefits and eligibility for
    tuition remission) and be treated differently for tax purposes, VISA
    eligibility, and health care benefits. It is essential that the
    "dual role" of research and education for graduate students and
    postdoctoral scholars be recognized and artificial barriers removed.

**(5) Revise Agency/University Business Relationship to Recognize
Accountability and Trust**

Despite a plethora of experience working with one another, current
business models between the federal funding agencies and universities
remain almost entirely "transaction" based (e.g., proposals, awards,
reports, etc. ). This business model is expensive, labor-intensive (of
particular concern given the administrative cap on F&A), and takes
little account of the technological advantages that are now available.
We recommend that:

A.  *Federal agencies and universities should consider the viability of
    "business-to-business" models for working together* . For example,
    if common standards for conducting business are adopted and best
    business practices implemented, institutional research oversight
    systems deploying these standards and practices could potentially be
    accredited to do business with the federal government, allowing
    business to be conducted on a "business-to-business" basis rather
    than on a per-transaction basis. Accreditation could result in the
    removal of project-specific requirements and rules, and compliance
    and stewardship verified via exception reporting or periodic system
    audits or even remote access by federal officials to on-line
    real-time information of common interest.

B.  *Federal agencies should promote the use of business models that
    limit data collection to information that is critical and timely to
    decision-making, and that recognizes existing roles and
    responsibilities in the research enterprise.* Excellent examples of
    this model are NIH's Modular Grant and Just-in-Time mechanisms, both
    of which warrant extension to other agencies. The modular grant
    mechanism simplifies proposal preparation by focusing attention on
    those data elements that are critical to the peer review process,
    and provides up-front recognition that extremely detailed budgetary
    information is irrelevant given the post-award authority of
    principal investigators to make judicious budgetary adjustments as
    their projects are under way. The Just-in-Time mechanism eliminates
    the need for an institution to perform protocol reviews for projects
    not likely to be funded, resulting in significant labor and cost
    savings.

**(6) The Funding of Institutional Review Boards**

Institutional Review Boards (IRBs) and Institutional Animal Care and Use
Committees (IACUCs) play critical and demanding roles in modern
biomedical and social science research. They are central to the
nation\'s efforts towards protecting human and animal subjects while
ensuring that the research moves forward. Yet, there is considerable
evidence that they are under-funded and over-worked. Because the federal
reimbursement for administrative expenses is capped and insufficient to
cover university administrative expenses associated with
federally-funded research, IRB and IACUC members carry on their
responsibilities on top of those for which they are paid. Such a
situation necessarily limits, on average, the attention that can be
devoted to the important IRB and IACUC responsibilities

To alleviate this problem, we recommend that:

A. *The federal government recognize the importance of the IRBs and
IACUCs by fully funding that portion of their endeavors that is
attributable to federally-funded research.* The funding should be
sufficiently large so that it compensates all those who participate in,
and staff, these compliance committees. Such funding would free up time
for the committee members to focus on their compliance responsibilities.

We appreciate the opportunity to provide input into the agenda for the
OSTP Subcommittee on Research Business Models, and would welcome the
opportunity to work with the Subcommittee to articulate the key
principles, to prioritize the overall agenda, and to identify and
implement solutions to the problems outlined here and by others.

Sincerely,

Arthur Bienenstock

Vice Provost and

Dean of Research and Graduate Policy