NATIONAL SCIENCE FOUNDATION. Preliminary Observations on Indirect Costs for Research

NSF awards billions of dollars to institutions of higher education universities, K-12 school systems, industry, science associations, and other research organizations to promote scientific progress by supporting research and education. NSF reimburses awardees for direct and indirect costs incurred for most awards. Direct costs, such as salaries and equipment, can be attributed to a specific project that receives an NSF award. Indirect costs are not directly attributable to a specific project but are necessary for the general operation of an awardee organization, such as the costs of operating and maintaining facilities. For certain organizations, NSF also negotiates indirect cost rate agreements, which are then used for calculating reimbursements for indirect costs. Indirect cost rate negotiations and reimbursements are to be made in accordance with federal guidance and regulation and NSF policy. This testimony reflects GAOs preliminary observations from its ongoing review that examines 1 what is known about NSFs indirect costs for its awards over time, and 2 the extent to which NSF has implemented guidance for setting indirect cost rates for organizations. GAO reviewed relevant regulation, guidance, and agency documents analyzed budget data, a nongeneralizable sample of nine indirect cost rate files from fiscal year 2016 selected based on award funding and interviewed NSF officials.