Research University Presidents Oppose DOD Research Cost Cap

November 5, 2007

The Honorable Nancy Pelosi Office of the Speaker H-232, US Capitol Washington, DC 20515

Dear Madam Speaker:

As the leaders of our nation’s top research universities and institutes, we write to express our strongest opposition to inclusion in the FY 2008 Defense Appropriations bill of an arbitrary cap on the reimbursement of facilities and administrative (F&A) costs to universities for research they conduct on behalf of the Department of Defense (DOD).

The inclusion of an arbitrary cap set at any level would effectively circumvent existing OMB requirements for fair and equitable reimbursement of real and necessary costs our universities incur when performing research on behalf of the federal government. Reimbursement of such costs is already limited by rates negotiated in accordance with strict OMB rules.

These indirect cost reimbursements are audited rigorously and negotiated regularly by federal agencies to ensure that taxpayer dollars are appropriately spent. Universities do not make a profit from such payments. The payments reimburse actual costs incurred and often do not cover all those costs. To the extent costs are not reimbursed, universities must use other revenue sources to pay for them. If Congress makes it more costly for universities to conduct research by implementing such an arbitrary cap, it will create a major disincentive for universities to conduct DOD research. This would disrupt a relationship that has been extraordinarily productive for our national security and our economy – a relationship that has produced such technologies as lasers, stealth technology, global positioning systems (GPS), night vision technology, and the Internet.

While our universities oppose an arbitrary cap on indirect costs, we certainly understand that Congress might want to gain a better understanding of indirect costs and how they are reimbursed. We would welcome an independent review by the Government Accountability Office of the current OMB process by which university indirect costs rates are determined and reimbursed. Such a study would ensure that Congress is well informed before taking an action that could reduce DOD’s access to the best and brightest researchers from our universities for conducting research in support of our nation’s defense.

Sincerely,

James W. Abbott Michael F. Adams President President University of South Dakota The University of Georgia

Stan L. Albrecht Robert A. Altenkirch President President Utah State University New Jersey Institute of Technology

John L. Anderson William B. Applegate President Interim President and Dean Illinois Institute of Technology Wake Forest University Health Sciences

David B. Ashley Guy H. Bailey President Chancellor University of Nevada, Las Vegas University of Missouri-Kansas City

Charles R Bantz Gretchen M. Bataille Chancellor President Indiana University-Purdue University The University of North Texas Indianapolis

Donald L. Beggs Henry S. Bienen President President Wichita State University Northwestern University

Robert J. Birgeneau J. Michael Bishop Chancellor Chancellor University of California, Berkeley University of California, San Francisco

Gene Block George Blumenthal Chancellor Chancellor University of California, Los Angeles University of California, Santa Cruz

Lee C. Bollinger David L. Boren President President Columbia University The University of Oklahoma

Erskine B. Bowles Richard Broadhead President President The University of North Carolina Duke University

William R. Brody Robert A. Brown President President The Johns Hopkins University Boston University

Roger Brown Robert H. Bruininks Chancellor President University of Tennessee at Chattanooga University of Minnesota, Twin Cities

David Callender Tom Buchanan President President University of Texas Medical Branch at University of Wyoming Galveston

Nancy Cantor John F. Carney, III Chancellor and President Chancellor Syracuse University University of Missouri-Rolla

Robert L. Carothers John T. Casteen President President The University of Rhode Island University of Virginia

Jean-Lou Chameau David L. Chicoine President President California Institute of Technology South Dakota State University

Francisco G. Cigarroa Wayne Clough President President University of Texas Health Science Center Georgia Institute of Technology at San Antonio

Jared L. Cohon Mary Sue Coleman President President Carnegie Mellon University University of Michigan

Robert D. Coombe France Cordova Chancellor President University of Denver Purdue University

Denis Cortese Scott S. Cowen President and CEO President Mayo Clinic Tulane University

Loren Crabtree Michael M. Crow Chancellor President University of Tennessee Arizona State University

Eddie J. Davis Brady J. Deaton Interim President Chancellor Texas A&M University University of Missouri-Columbia

Lois B. DeFleur George Dennison President President Binghamton University The University of Montana

Michael V. Drake Philip Dubois Chancellor Chancellor University of California, Irvine University of North Carolina at Charlotte

Robert C. Dynes Mark A. Emmert President President University of California University of Washington

Drew Gilpin Faust Elson S. Floyd President President Harvard University Washington State University

Daniel M. Fogel Marye Anne Fox President Chancellor University of Vermont University of California, San Diego

David B. Frohnmayer Geoffrey Gamble President President University of Oregon Montana State University

Mike Garrison Alice P. Gast President President West Virginia University Lehigh University

E. Gordon Gee Gregory L. Geoffroy President President The Ohio State University Iowa State University

Thomas F. George Jay Gogue Chancellor President University of Missouri-St. Louis Auburn University

Raymond S. Greenberg Robert D. Grey President Acting Chancellor Medical University of South Carolina University of California Riverside

Amy Gutmann Mark Hamilton President President University of Pennsylvania University of Alaska

Patrick T. Harker Dianne F. Harrison President President University of Delaware California State University, Monterey Bay

Robert E. Hemenway John Hennessy Chancellor President The University of Kansas Stanford University

Richard Herman Virginia S. Hinshaw Chancellor Chancellor University of Illinois at Urbana- University of Hawaii at Manoa Champaign

John C. Hitt Susan Hockfield President President University of Central Florida Massachusetts Institute of Technology

Sung-Mo "Steve" Kang Russel E. Kaufman Chancellor President and Chief Executive Officer University of California, Merced The Wistar Institute

Shirley Kenny Robert A. Kennedy President President Stony Brook University, The State University of Maine University of New York

Charles Kupchella Gordon H. Lamb President Interim President University of North Dakota University of Missouri System

David Leebron Lester Lefton President President Rice University Kent State University

Richard C. Levin John V. Lombardi President President Yale University Louisiana State University System

Bernie Machen Carolyn R. Mahoney President President University of Florida Lincoln University of Missouri

Sylvia Manning Sally Mason Chancellor President University of Illinois at Chicago The University of Iowa

Richard L. McCormick Roderick J. McDavis President President Rutgers, The State University of New Ohio University Jersey

John Mendelsohn Michael A. McRobbie President President The University of Texas M. D. Anderson Indiana University Cancer Center

Alan G. Merten James B. Milliken President President George Mason University University of Nebraska

James Moeser C.D. Mote, Jr. Chancellor President The University of North Carolina at University of Maryland, College Park Chapel Hill

Mark Nordenberg James Oblinger Chancellor Chancellor University of Pittsburgh North Carolina State University

Carl Patton George Pernsteiner President Chancellor Georgia State University Oregon University System

John Peters G.P. "Bud" Peterson President Chancellor Northern Illinois University University of Colorado at Boulder

John Peterson Malcolm Portera President Chancellor University of Tennessee, System University of Alabama System

William C. Powers, Jr. Daniel W. Rahn President President The University of Texas at Austin Medical College of Georgia

Shirley Raines David J. Ramsay President President University of Memphis University of Maryland Baltimore

Edward J. Ray Kevin Reilly President President Oregon State University University of Wisconsin System

Jehuda Reinharz Daniel D. Reneau President President Brandeis University Louisiana Tech University

Charles P. Ruch Roseanne O. Runte President President South Dakota School of Mines and Old Dominion University Technology

Steven B. Sample R. Craig Schnell President Provost University of Southern California North Dakota State University

Michael Schwartz Joel Seligman President President Cleveland State University University of Rochester

John Sexton Robert N. Shelton President President New York University University of Arizona

Ruth J. Simmons Lou Anna K. Simon President President Brown University Michigan State University

John B. Simpson David Skorton President President University at Buffalo, The State Cornell University University of New York

Barbara R. Snyder Andrew A. Sorensen President President Case Western Reserve University University of South Carolina

Graham B. Spanier James D. Spaniolo President President The Pennsylvania State University University of Texas at Arlington

Charles W. Steger Shirley M. Tilghman President President Virginia Tech Princeton University

Lee Todd Denise M. Trauth President President University of Kentucky Texas State University-San Marcos

Larry N. Vanderhoef James W. Wagner Chancellor President University of California, Davis Emory University

Jon Wefald T.K. Wetherell President President Kansas State University Florida State University

Kern Wildenthal John D. Wiley President Chancellor University of Texas Southwestern Medical University of Wisconsin-Madison Center

Jack M. Wilson Mark Wrighton President Chancellor The University of Massachusetts Washington University in St. Louis

Henry T. Yang Michael K. Young Chancellor President University of California, Santa Barbara University of Utah

Mark G. Yudof Nicholas S. Zeppos Chancellor Interim Chancellor and Provost University of Texas System Vanderbilt University

Robert J. Zimmer Nancy L. Zimpher President President The University of Chicago University of Cincinnati

cc: Secretary of Defense Speaker of the House House Minority Leader House Appropriations Committee Chair and Ranking Member House Appropriations Subcommittee on Defense House Armed Services Committee Chair and Ranking Member Senate Majority Leader Senate Minority Leader Senate Appropriations Committee Chair and Ranking Member Senate Appropriations Subcommittee on Defense Senate Armed Services Committee Chair and Ranking Member