Michael J. Holland

Office of Science & Technology Policy

1650 Pennsylvania Ave., N.W.

Washington, DC 20502

(via email: mholland@ostp.eop.gov)

> Dear Dr. Holland
>
> I write as a senior research officer at The University of Chicago to
> comment on certain aspects of the business relationship between
> research universities and the federal agencies, in response to the
> request for information by the National Science and Technology Council
> Subcommittee on Research Business Models in the *Federal Register* of
> August 6, 2003.   Broader aspects of this relationship are described
> in the detailed letter to you dated October 1, 2003 from the Council
> on Governmental Relations, which I strongly endorse; and in a second
> letter dated October 6, 2003 from a group of senior research officers
> at eleven leading private research institutions, of which I am a
> signatory.
>
> The Federal Register identifies some areas in which the Subcommittee
> wishes to receive comments, I will speak to some of these
> specifically, noting the area of reference.\
> \
>  **A. Accountability**. Any business relationship must be founded on a
> sound grasp by all parties of the goals of each, the constraints
> within which they operate, and the desired outcomes.   Clearly, our
> relationship has not been that of the usual business variety where
> typically there is a vendor and a purchaser.  Research is not a
> product that can be purchased with the expectation of a specific
> outcome.  (I do not count contracts as true research; there, a
> specific outcome such as the construction of a research building or
> the final stages of development of a surgical device can be reasonably
> expected.) Consequently, it is important to frame "accountability"
> within the context of the "business" relationship between universities
> and the federal government. Historically, the relationship between
> research universities such as The University of Chicago and federal
> agencies has been largely successful because we both recognized our
> collateral roles in achieving the national goals in higher education
> and fundamental research.  Promising research has been successful in
> attracting funding. The research has been vigorously prosecuted within
> a business and administrative framework that, while it creaks from
> time to time, does not offer insuperable barriers. The outcomes of the
> research have been widely disseminated to the public via scholarly
> publications and through the production of highly trained graduates
> and postdoctoral associates who apply their new knowledge in
> industrial, government and educational careers. Where appropriate,
> these outcomes are also disseminated to industry via technology
> transfer agreements, licensing, or the formation of
> university-associated startup companies, all under the mandates of the
> Bayh-Dole Act.  By and large, we work successfully together.  I
> therefore do not believe that wholesale revision of our business
> relationship is called for. However, applying a short-term-product
> model of accountability, more suited to the commercial sector, is
> unrealistic and doomed to failure. Research outcomes are in the realm
> of the possible, not the guaranteed. It is interesting to note that
> the government has struggled to define quantifiable standards for
> judging research investments, at the same time that the rest of the
> world tries to emulate our best research universities.  \
> \
>  **G. Multidisciplinary/collaborative research** **and B.
> Inconsistency of policies and practices among Federal agencies.** The
> nature of research scholarship is continually evolving.  It is
> essential that aspects of the business relationship, drawn up earlier
> under different circumstances, do not impede this evolution.   The
> business relationship must support the research, not hinder it. 
> Flexibility is called for, on both sides.  For example, new scholarly
> imperatives in many disciplines are fuelling a shift away from the
> traditional single investigator, single laboratory model towards
> multi-investigator, team-based research.  As researchers at first-rank
> institutions we seek to pursue research together, to access world
> class, larger-scale research facilities, to take advantage of
> high-speed data transfer and facilitate remote collaborations, and to
> generate undreamed-of quantities of data to be scanned for novel
> linkages and ultimately deposited in publicly-accessible databases. 
> This is an extremely important scholarly development.  It must be
> vigorously encouraged since it offers the real prospect of better
> research, more speedily conducted, in a highly cost-effective
> framework.    But, there are problems.  These new teams often
> encompass several different disciplines whose traditional funding
> sources reflect disciplinary traditions and often funding agency
> cultures (for example NIH, NSF, DOE, ONR).  This poses inter-agency
> issues; do the different agencies have identical business practices? 
> Often they do not.  This is less of a problem if a single agency is
> prepared to act as the lead and the other agencies are willing to
> channel their support for the project through that agency; but this by
> no means always the case. Scientists from multiple universities and
> federal laboratories are increasingly interested in collaboration; but
> the ease of agreement on scientific problems is often stymied by the
> lack of agreement on how to resolve business terms and conditions. New
> business models that facilitate collaborative work by designating a
> LEAD agency to streamline points of business conditions will greatly
> enhance scientific productivity.
>
> **A. and B. Inconsistency of policies and practices among Federal
> agencies and among universities**. (and we might add, other
> collaborating partners, such as private industry) A team may comprise
> researchers from several institutions and indeed, span university,
> industry and government laboratories.  The other side of the coin thus
> arises when the business practices of these sectors differ, as they
> inevitably do.  As a first example, the policies and business
> practices with respect to the identification of and accounting for
> indirect costs differ greatly in these three types of research
> institution.  Industry expects to recover the full indirect costs
> associated with their research contribution, under business-oriented
> accounting practices; universities labor under the much more
> restrictive accounting policies of OMB Circular A-21. The RAND report
> to OSTP ("Paying for University Research Facilities and
> Administration," Charles A. Goldman and T. Williams, 2000, RAND
> (301-451-7002)) thoroughly assessed the inconsistencies and variance
> in recovery of indirect costs between sectors. Team-based research is
> more complicated to administer, the genuine administrative costs are
> higher (though they benefit from some economies of scale), and the
> ability to account for these administrative costs as direct costs,
> attributable specifically to the team in question, should not be
> impeded.  Present business practices in this area and the criteria by
> which they are audited are highly variable.   Second, industry
> typically expects to retain all intellectual property generated as a
> result of the research; universities are generally less possessive,
> though keenly aware of the financial benefits that may ultimately
> derive from the research of their faculty when effective technology
> transfer agreements are crafted.   Third, compliance issues often
> arise.  While a single institution can properly be required to
> demonstrate that it is in compliance with all applicable regulations,
> when this demonstration extends (as it does at present) to the
> requirement that it monitor and certify the compliance of all other
> institutions associated with a multi-institution project, largely
> unnecessary, time-consuming and expensive redundancy in compliance
> monitoring is introduced. 
>
> **E. Regulatory Requirements**. An obvious example of administrative
> inefficiency, but one mandated by compliance requirements, is
> subrecipient monitoring under A-133 Single Audit standards. Data
> clearly demonstrate that the vast majority of our subrecipients on
> research agreements are the same institutions funded by the federal
> government as prime grantees and contractors. The University of
> Chicago is providing A-133 audit reports to dozens if not hundreds of
> other universities and medical centers at the same time that they are
> sending us their reports. We are monitoring one another, while the
> government is receiving the same A-133 audit reports. We are obliged
> to assure that our collaborating institutions have addressed any
> deficiencies in their audits, at the same time that the government is
> supposed to be assuring that such deficiencies, if any, are addressed.
> This is expensive, redundant duplicative work. There must be a better
> business model. Data for the University of Chicago for subrecipient
> activity demonstrates two points -- one the scale of collaborative
> work and the volume of redundancy we are confronting:
>
> Subawards Issued Subawards Received\
> FY 1998 \$10,332,399 \$12,360,789\
> FY 1999 \$8,570,835 \$15,350,378\
> FY 2000 \$12,137,955 \$17,534,546\
> FY 2001 \$15,908,117 \$18,499,333\
> FY 2002 \$23,296,001 \$23,742,799  \
> \
>  These difficulties and differences can be so great as to impede or
> even prohibit effective research collaborations.  The bureaucracy
> looks like it will overwhelm the research, the cost - benefit equation
> tips against the researchers, and they simply decline to engage in the
> collaboration.  The business practices are so inefficient that they
> may well have a chilling effect on research. Identifying and
> minimizing the unnecessary impediments to team-based research is
> therefore another desirable business practice.\
> \
> Thank you for the opportunity to comment on the areas of concern to
> the Subcommittee. I look forward to seeing the results of their
> consideration of the community's comments.
>
> Sincerely,\
> \
> Keith Moffat\
> Louis Block Professor of Biochemistry & Molecular Biology\
> Deputy Provost for Research\
> The University of Chicago\
> \
> copies to: John H. Marberger, Kathie L. Olsen