(The information supplied follows:) DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, PUBLIC HEALTH SERVICE, Washington, D.C., February 11, To: The heads of institutions conducting research with Public Health S research grants. From: Chief, Division of Research Grants. In appropriating funds for the Department of Health, Education, an fare for fiscal year 1966, the Congress removed the previous limitation percent for indirect cost and inserted in its stead a provision that "none funds provided herein shall be used to pay any recipient of a grant for t duct of a research project an amount equal to as much as the entire cost project." The attached Bureau of the Budget Circular A-74 establishes and guidelines for the Federal Government to use in connection with co ing for research grants. The provisions of Circular A-74 will be applied to Public Health Serv and renewal (competing) research grants for which the Notice of R Grant Awarded carries a date of March 1, 1966, or later as the "date At the same time, full indirect cost may be allowed on these grants 1 an indirect cost rate has been satisfactorily negotiated in accordance w reau of the Budget Circular A-21. In the absence of a negotiated ra direct costs will be awarded. The provisions of Circular A-74 will not be applied to continuation (noncompeting) nor to supplements to grants awarded prior to the date of this policy. For the remainedr of fiscal year 1966 and through year 1967, the PHS interim policy on cost sharing will continue to be to continuation or supplemental awards for ongoing projects. The policy requires that the Public Health Service limit the indirect cost a to 90 percent of actual indirect cost or 20 percent of the total direct co on the Notice of Grant Awarded, whichever is the lesser. It should be noted that the provisions of Circular A-74 are not in reduce the current level of cost participation by the grantee instituti as a result of increased indirect cost allowances. The circular doe that where there has been no requirement for cost participation in the grantee institution must now share in the research costs on more tha basis. Where the applicatnt proposes a "lower" contribution as des section 4.c. of the circular, explanation and justification must be prov the cost-sharing data. There are four additional provisions in connection with cost shar should be called to your attention at this time: (1) each grantee instit be required to maintain records to demonstrate the total actual contr the grantee; (2) time or effort reports will be required for person salaries, in whole or in part, are charged to the PHS grant or clain grantee contribution to the research supported by the grant; (3) t of grantee contribution will be subject to audit; and (4) the require viously governing expenditure of Public Health Service funds, inclu approval for certain uses, will now apply to the total costs of the pro will include both PHS funds and the grantee contribution. The PHS has on hand many new and renewal applications which reviewed. In addition, many more will be received within the next 1 before application forms and instructions can be developed to provid tion on proposed cost sharing. Institution officials responsible for ing specific grants will receive instructions from PHS awarding I Divisions concerning additional information that will be needed for ing application before an award can be made. The cost-sharing policy applies only to research project grants. apply, for example, to general research support grants, training gr services grants, construction grants, conference grants, grants to F cies, of foreign grants where the indirect cost is provided by institution. EUGENE A. CONFR EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., December 13, 1965. CIRCULAR No. A-74 To: The heads of executive departments and establishments. Subject: Participation in the costs of research supported by Federal grants. 1. Purpose.—This circular provides guidelines for Federal agencies concerning: participation by colleges and universities and other institutions in the cost of research supported through Federal grants. These guidelines take into account provisions in the appropriation acts for the fiscal year 1966 for the Department of Defense (Public Law 89-213), the Departments of Labor and Health, Education, and Welfare (Public Law 89-156), and the Independent Offices (Public Law 89-128), that prohibit Federal agencies from paying any recipient of a grant for the conduct of a research project an amount equal to as much as the entire cost of such a project. These guidelines also take into account the removal of statutory limitations on the payment of the indirect costs of research financed by Federal grants. This circular does not affect existing policies and practices of Federal agencies. concerning cost participation in research financed through contracts. 2. Effective date. The guidelines set forth in this circular should be applied as soon as practicable to all research grants awarded subsequent to the issuance of this circular and not later than March 1, 1966. 3. Background of cost participation.-The conduct of research is a significant function and important responsibility of institutions of higher education. In addition to contributing to the advancement of knowledge, academic research is an essential element in the advanced training of scientists and engineers. At the same time, the Federal Government relies heavily upon research conducted in non-Federal institutions, and particularly in colleges and universities, to assist in the accomplishment of the missions of Federal agencies. Thus, Federal research grants generally serve the objectives both of the institutions and of the Federal Government. Cost participation reflects this mutuality of interest. In the past, cost participation by the grantee institution has been accomplished through: (a) cost participation as a consequence of legal limitations on the proportion of indirect costs payable by the Federal agencies under research grants; (b) cost participation through continued payment by grantee institutions of part or all the salaries of faculty members or professional personnel participating in sponsored research, and (c) payment by grantee institutions of a portion of other costs such as equipment. 4. Guidelines for Federal agencies.— (a) Agencies should generally continue their present policies and practices concerning the extent of cost participation by grantee institutions: (1) Except for increased indirect cost allowances which may be paid as a result of the removal of statutory limitations on payment of such allowances; (2) Except that in cases where Federal agencies would otherwise pay all research costs, the applicant institution must share in such research costs on more than a token basis. (b) The costs which may be charged to a research grant include direct costs and their associated indirect costs, as determined in accordance with Bureau of the Budget Circular No. A-21 (revised), dated March 3, 1965. (c) The extent of cost participation by grantees may vary in accordance with a number of factors relating to both the granting agency and the grantee institution, e.g.: (1) A higher degree of cost participation should ordinarily exist when the cost of the research consists primarily of the efforts of senior faculty during the academic year, or when the grantee institution's long range interests are best served by substantial cost participation; (2) Cost participation should generally be lower when a major portion of the research cost consists of equipment, when the grant provides for a large component of services to be made available on a regional or national basis, or when in the view of a Federal agency an area of research requires special stimulus in the national interest. 5. Administration.— (a) Federal agencies will require that proposals for each research grant include: (1) The amount requested for direct expenses, by category of direct expense; (2) The amount requested for indirect expenses related to the requested direct expenses: (3) The total grant request; (4) The additional amount which the grantee institution proposes as its contribution from non-Federal sources to the planned rsearch. (b) Federal agencies will require each grantee institution to maintain records to demonstrate a total actual contribution by the grantee institution of an amount which is not less in proportion to the actual charges against the grant, than the total amount proposed in the application, or any subsequent revision thereof, approved by the agency. The amount of the grantee institution's contribution will be subject to audit. 6. Agency reports on cost participation.-Each agency which awards research grants will report to the Bureau of the Budget by November 1 of each year on cost participation by grantee institutions in the immediately preceding fiscal year. This report should provide information on the overall amount obligated for grants in the preceding fiscal year and the overall additional amount which grantee institutions proposed to contribute to the research supported by these grants. (The report to be submitted by November 1, 1966, should cover grants awarded from the date of implementation of this circular through June 30, 1966.) CHARLES L. SCHULTZE, Director. Dr. STEWART. Mr. Fogarty, the regulations have been developed and are about to go out to the institutions. It will be a start in this application March 1, and as far as I know the response has been satisfactory to the implementation of cost-sharing. Mr. FOGARTY. I think that concludes our overall testimony for the Public Health Service. I served my apprenticeship under Dr. Parran and, of course worked with Dr. Sheele, Dr. Burney, Dr. Terry, and now you. I think you have given us one of the best presentations I have heard. I think you had good answers to the questions. Mr. FLOOD. I agree. Mr. FOGARTY. You did a real fine job. Dr. STEWART. Thank you very much, Mr. Chairman. THURSDAY, FEBRUARY 10, 1966. BUILDINGS AND FACILITIES WITNESSES DR. WILLIAM H. STEWART, SURGEON GENERAL C. ROBERT SEATER, ACTING EXECUTIVE OFFICER DR. G. BURROUGHS MIDER, DIRECTOR OF LABORATORIES AND HARRY L. DORAN, CHIEF FINANCE OFFICER JAMES B. CARDWELL, DEPARTMENT DEPUTY COMPTROLLER |