What is FAIR? An overview of an alternative to the 15 percent F&A cap

Earlier this year, the White House aimed to cut federal funding for scientific research by instituting a 15% cap on indirect costs. In response, a national group of university research representatives has developed the Financial Accountability in Research (FAIR) model as an alternative plan for funding indirect costs, which they are proposing Congress adopt into law. 

So, what is FAIR and how does it propose to restructure F&A?

The goal of the FAIR model is to provide greater transparency and accountability to taxpayers about the cost of federally funded research, according to the Joint Associations Group (JAG) on Indirect Costs, comprised of national organizations representing academic, medical, and independent research institutions, including the University of Kansas. 

These indirect costs are the essential costs universities incur when conducting federally funded research. As opposed to direct costs, which are tied directly to specific projects or programs, indirect costs pay for expenses indirectly connected to the research, some of which are reimbursed by the universities. 

The FAIR model reorganizes and renames research costs into three categories: 

• Direct costs would be called Research Performance Costs (RPC). 
• Indirect costs would be called Essential Research Performance Support (ERPS) and would represent costs that are “necessary for carrying out research and that can be linked explicitly to a given project,” according to the JAG memo. They cover four areas: regulatory compliance; award monitoring, oversight and reporting; research information services; and essential research performance facilities.
• A catch-all category for anything not in the ERPS category, to be called General Research Operations, including human resources, procurement and general services.

Finally, the FAIR model would give universities two options for calculating costs, based on their size and capacity. 

Nationally, the 15% cap from federal agencies on indirect costs is estimated to cut billions of dollars in funding for laboratories, utilities, equipment, support staff, data storage, high-speed internet, and more that support research.

At KU, the current F&A rate negotiated with the federal government for F&A is 54.5%. 

The Association of American Universities (AAU) Board and leaders of nine associations that comprise JAG recently issued statements endorsing the FAIR model and encouraging Congress and the current administration to work with the U.S. research community to codify it into law. 

For now, the government’s proposed changes in F&A are paused as court cases opposing them proceed.