The Government Plays Favorites When Funding Research Labs' Basic Needs

​ Over the last few months, in order to demonstrate Big Government waste, Congressional Republicans have targeted their ​outrage at a researcher who got federal money to study a shrimp that runs on a treadmill. Don't tell those members of congress what other research federal grant money for science subsidizes.

Doing scientific research ain't cheap, and much of the cost of doing business has nothing to do with doing the experiments themselves. That's why the National Institutes of Health spent more than $5.7 billion on researchers' "indirect costs" in 2013—things like electricity and heating bills, administrative expenses, building repairs, and researcher housing.

But the way this money is doled out is highly variable, according to a new report by Nature's Heidi Ledford, who was able to obtain research-related financial information from hundreds of universities and nonprofits using a Freedom of Information Act request to the US Dept. of Health and Human Services, along with data available from the US National Institutes of Health.

Assuming you agree that the federal government should indeed be spending money on Stanford University's heating and air conditioning bill or secretary costs (which, for some, certainly isn't a given, but that's perhaps another story), there are some pretty problematic revelations in Ledford's report.

According to the documents Ledford obtained, the reimbursement rates for indirect costs range from 20 percent to 85 percent at universities and have a larger spread at nonprofits. The federal government pays for 97 percent of the indirect research costs at La Jolla Infectious Disease Institute in San Diego, for instance, but pays for less than half at many other nonprofit institutes. It promised to pay for 75 percent of Villanova University's indirect costs, but promised just 48 percent of Syracuse University's.

What gives? Well, the rates are negotiated, and some colleges are better at it than others.

"Academia creates highly dysfunctional markets, especially where the pricing isn't transparent," John Bohannon, a Harvard University  ​researcher and science journalist with Science's magazine, told me. "People have been exploiting it for a long time. The overheads study shows that universities are getting their pound of flesh as well."

Earlier this year,  ​a probe by Bohannon found that universities have been paying wildly different prices for subscriptions to academic journals, even after adjusting for each university's size.

But, back to research grants and costs. Perhaps you can reconcile the different rates the government pays out with the idea that some types of research are more important than others, which is certainly a fair argument.

Whatever Johns Hopkins is working on is different from what Duke is working on is different from what a small college in the middle of nowhere is working on. They have different overhead costs and energy costs and all of that. Maybe negotiation makes sense, considering those facts. Then again, maybe it doesn't—the European Union pays out 25 percent flat for indirect costs; and Japan has a flat rate of 30 percent, for what it's worth.

"Actual costs vary based on a variety of factors that include energy costs for heating and cooling, which depends upon geographic location, the age and condition of facilities and buildings, and the amount of renovation and construction needed to house certain types of research projects," the Association of American Universities wrote in a recent explainer about indirect costs.

But regardless of what you think about negotiation, it turns out the federal government often isn't holding up its end of the bargain. When it comes to actually collecting the grant money, many universities have found that there are undue hoops they need to jump through in order to actually get paid back.

"Very few institutions receive the full negotiated rate on the direct funding they receive," Ledford wrote.

That's because, in the past, universities have been caught abusing the system. In the early 1990s, Stanford used some of its indirect costs to cover the depreciation on a yacht it owned and to buy furniture for the university's president. Since then, "institutions often receive much less than what they have negotiated, thanks to numerous restrictions placed on what and how much they can claim," Ledford wrote.

That means many universities are losing money each time they do government-sponsored research, work that organizations such as the National Institutes of Health and National Science Foundation had originally deemed worthy of government subsidies. Most universities are forced to grin and bear it, because competition for grants is still extremely stiff.

Perhaps that, too, is why some universities are content to just be given a couple percentage points' worth of reimbursement from the government, knowing their colleagues are getting a much better deal.