Cover Image

Not for Sale



View/Hide Left Panel

EXECUTIVE SUMMARY

The costs of conducting research at universities and independent research institutes are covered by funds expended directly for research (“direct costs”) and by funds computed as a percentage of the direct charges ( “indirect costs”) for such expenses as heat, air conditioning, lighting, and administrative services. Indirect costs are also called facilities and administrative, or F&A, costs. The Office of Management and Budget (OMB) has a policy, Circular, A-21, that provides criteria to determine which costs are direct and which are indirect.

In 1974, a National Institutes of Health (NIH) committee wrote the first edition of a manual that provides guidance for determining the costs of animal research facilities (ARFs) and developing rates for charging users of the services of the facilities. The manual, the Cost Analysis and Rate Setting Manual for Animal Research Facilities (CARS Manual), is used by directors of AFRs that receive federal funds to determine direct charges to investigators and indirect charges to the institutions ' indirect cost pool. Revision of Circular A-21 led to a revision of the CARS Manual in 1979. Further evolution of animal-based research led the NIH National Center for Research Resources (NCRR), to appoint a committee, which produced the 1997 revision of the CARS Manual. The revised manual recommends that the costs of an ARF be assigned to three main categories: institutional F&A costs, ARF internal support costs, and ARF internal direct costs. OMB has not accepted that the first category can be assigned to an institution's indirect cost pool; but both OMB and the CARS Committee agree that the second and third categories are to be assigned to the direct cost pool.

NCRR asked the National Research Council to form a committee to study this issue. The Committee on Cost of and Payment for Animal Research is composed of 11 experts with extensive experience in laboratory animal medicine (in academe, government, and the pharmaceutical industry), university administration, biomedical research, and management. Brief biographical sketches of the committee members can be found in the appendix. The committee was asked to develop recommendations by which federal agencies and research institutions can establish what cost components of ARFs should be charged to institutions' indirect cost pool and what cost components should be direct costs that are included in per diem charges to investigators and to assess the financial and scientific ramifications that these criteria would have for federally funded institutions. Members of the committee developed position papers that were discussed at a 1½-day meeting, after which several drafts of this report were circulated and commented upon until everyone was satisfied that the report was accurate and reflected a consensus of all members. This report, based on the experience and expertise of the members of the committee, is an interim report to analyze the ARF cost-allocation issue. The committee will next analyze the cost components of ARFs at selected institutions to identify major cost items and recommend ways of containing costs.

The committee found that federal officials have usually treated ARFs as specialized service facilities, that is, service centers that provide specialized services to specific users–



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance EXECUTIVE SUMMARY The costs of conducting research at universities and independent research institutes are covered by funds expended directly for research (“direct costs”) and by funds computed as a percentage of the direct charges ( “indirect costs”) for such expenses as heat, air conditioning, lighting, and administrative services. Indirect costs are also called facilities and administrative, or F&A, costs. The Office of Management and Budget (OMB) has a policy, Circular, A-21, that provides criteria to determine which costs are direct and which are indirect. In 1974, a National Institutes of Health (NIH) committee wrote the first edition of a manual that provides guidance for determining the costs of animal research facilities (ARFs) and developing rates for charging users of the services of the facilities. The manual, the Cost Analysis and Rate Setting Manual for Animal Research Facilities (CARS Manual), is used by directors of AFRs that receive federal funds to determine direct charges to investigators and indirect charges to the institutions ' indirect cost pool. Revision of Circular A-21 led to a revision of the CARS Manual in 1979. Further evolution of animal-based research led the NIH National Center for Research Resources (NCRR), to appoint a committee, which produced the 1997 revision of the CARS Manual. The revised manual recommends that the costs of an ARF be assigned to three main categories: institutional F&A costs, ARF internal support costs, and ARF internal direct costs. OMB has not accepted that the first category can be assigned to an institution's indirect cost pool; but both OMB and the CARS Committee agree that the second and third categories are to be assigned to the direct cost pool. NCRR asked the National Research Council to form a committee to study this issue. The Committee on Cost of and Payment for Animal Research is composed of 11 experts with extensive experience in laboratory animal medicine (in academe, government, and the pharmaceutical industry), university administration, biomedical research, and management. Brief biographical sketches of the committee members can be found in the appendix. The committee was asked to develop recommendations by which federal agencies and research institutions can establish what cost components of ARFs should be charged to institutions' indirect cost pool and what cost components should be direct costs that are included in per diem charges to investigators and to assess the financial and scientific ramifications that these criteria would have for federally funded institutions. Members of the committee developed position papers that were discussed at a 1½-day meeting, after which several drafts of this report were circulated and commented upon until everyone was satisfied that the report was accurate and reflected a consensus of all members. This report, based on the experience and expertise of the members of the committee, is an interim report to analyze the ARF cost-allocation issue. The committee will next analyze the cost components of ARFs at selected institutions to identify major cost items and recommend ways of containing costs. The committee found that federal officials have usually treated ARFs as specialized service facilities, that is, service centers that provide specialized services to specific users–

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance an interpretation supported by OMB. The F&A costs associated with specialized service facilities are normally charged to users as part of their direct billing rates and are not eligible for recovery in an institution's indirect cost rates. OMB does allow indirect cost recovery for research laboratory space and other space used for research. Thus, if investigators keep their animals in their research laboratories, the heating and other indirect costs are included in the institution's indirect cost rate; but if they keep their animals in a centrally managed facility, the government may ask that all the costs be covered by direct research money. Yet a centralized ARF is where the most reliable and sophisticated research can take place, where the animals can receive better care, and where it is easier and cheaper for an institution to meet all legally mandated standards. Research using the animals is carried out largely in an ARF, so space there is used for research just as is all other research space. Therefore, it would be consistent with how other research space costs are handled to permit recovery of F&A costs of an ARF from the indirect cost pool. For reasons of consistency with the allocation of F&A costs to the indirect cost pool allowed for other research space, to insure high-quality animal-based research, and for humane care of animals consistent with federal regulations, the committee recommends that institutions be allowed to recover F&A costs of an ARF from the indirect cost pool.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance INTRODUCTION Animal models maintained under carefully controlled conditions (including behavioral management) more reliably yield high-quality scientific data than animal models maintained otherwise. During the last several decades, the quality of animal-based research and the care that animals receive in research programs has improved significantly. The changes have been driven by scientific advances and increased professionalism in laboratory animal science. Those advances, as well as more rigorous federal regulatory requirements, have required substantial institutional investment in facility and equipment modernization, staff and research oversight, and regulatory functions. Public accountability and credibility of animal-based research have also improved especially since 1966 when the Laboratory Animal Welfare Act, Public Law 89-544, was passed. These scientific advances coupled with increasingly sophisticated demands of biomedical research have lead to the development of the modern animal research facility (ARF). ARFs can be either dispersed throughout institutions or centralized within them; if centralized, they can be within or next to other laboratory research spaces or in separate locations that is easily accessible to investigators. In this report, centralized animal research facility (or centralized ARF) is taken to mean a facility where animal research laboratories and procedure rooms are clustered to permit the efficient delivery of high-quality research and care. Because investigators must see and interact with their animals often, commonly several times per day, it is undesirable to separate the ARF widely from other research space. Thus, there is a tradeoff between the benefits of centralization and investigator convenience. In the 1970s, the National Institutes of Health (NIH) published the Cost Analysis and Rate Setting Manual for Animal Research Facilities (the CARS Manual), which provides guidance for determining the costs of ARFs and developing rates for charging users of the services of the facilities. Although it does not constitute a government regulation itself, the CARS Manual is considered an authoritative document; it is published under the auspices of NIH, and is intended to promote consistency in how ARF costs are handled and rates are developed by institutions around the country. Because of increased sophistication of animal research, increased regulation of the care and use of laboratory animals, improved computer technology for cost accounting, and the need for consistency in costing and rate-setting in ARFs, the NIH National Center for Research Resources (NCRR) appointed a committee in 1995 to update and revise the CARS Manual. It cannot be finalized, however, until it is resolved whether facilities and administrative (F&A) costs associated with ARFs can be charged to the indirect cost pool, as is typically done for other research facilities, or must come from direct charges as part of the ARF per diem rates. The CARS committee originally recommended that direct costs of providing ARF services and internal support costs be included in the per diem charges while F&A costs including space, administration, and regulatory compliance costs should be included in the indirect cost pool. After discussion with OMB, who did not accept this interpretation, the CARS committee suggested a compromise: the F&A costs associated

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance with animal research space would be in the indirect cost pool, and all remaining costs would be recovered directly from ARF users. NCRR asked the National Research Council to form a committee to study this issue. The Committee on Cost of and Payment for Animal Research is composed of 11 experts with extensive experience in laboratory animal medicine (in academe, government, and the pharmaceutical industry), university administration, biomedical research, and management. The chair of the committee was, at the time of the study, vice president of Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC) Council and had visited more than 200 institutions to determine their accreditation status. Brief biographical sketches of the committee members can be found in the appendix. The committee was asked to develop recommendations by which federal agencies and research institutions can establish what cost components of ARFs should be charged to institutions' indirect cost pool and what cost components should be direct costs that are included in per diem charges to investigators and to assess the financial and scientific ramifications that these criteria would have for federally funded institutions. Members of the committee developed position papers that were discussed at a 1½-day meeting, after which several drafts of this report were circulated and commented on until everyone was satisfied that the report was accurate and reflected a consensus of all members. This report, based on the experience and expertise of the committee members, is an interim report to analyze the ARF cost-allocation issue. APPLICABLE POLICY The applicable policy for the payment of costs of federal grantee ARFs is the Office of Management and Budget (OMB) Circular A-21. According to the circular, the cost of research F&A can be recovered in federal research grants through the F&A cost rate. F&A costs are broad categories of cost. The circular defines facilities costs as consisting of “depreciation and use allowances, interest on debt associated with certain buildings, equipment and capital improvements, operations and maintenance expenses, and library expenses. ” It defines administrative costs as consisting of “general administration and general expenses, departmental administration, sponsored-project administration, student administration and services, and all other types of expenditures not listed specifically under one of the subcategories of Facilities (including cross allocations from other pools)” (section F.1). F&A costs are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activities, or other institutional activities (section E.1). These costs are allocated to major functions of an institution and then aggregated and treated as a common pool for each function. The end product of this process is an F&A rate for each major function. An exception to the allocation of F&A costs is the cost of facilities and administration allocable to specialized service facilities, which involve “the use of highly complex or specialized facilities, such as electronic computers, wind tunnels, and reactors”

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance (section J.44.a). The circular states that “the cost of such institutional services when material in amount will be charged directly to users” (section J.44.c). Moreover, “the cost of each service normally consists of both its direct costs and its allocable share of F&A costs” (section J.44.b). Some federal officials interpret that to mean that ARFs are specialized service facilities. The committee could not determine precisely how many institutions have been affected by this interpretation, but a list of roughly 20 institutions could be drawn from personal knowledge of the committee members. NIH does not track this issue, and the committee did not perform a nationwide survey on it. EVOLUTION OF ANIMAL-BASED RESEARCH In the early years of animal use in biologic and biomedical research, investigators typically housed their animals in rooms immediately adjacent to their research laboratories. The animal facilities were considered to be an integral part of an investigator's laboratory for reasons of convenience and experimental control. Roughly 40 years ago, animal rooms began to be consolidated into centralized facilities, thereby enabling the maintenance and use of animals under controlled environmental conditions that have stabilized research data and enabling effective disease surveillance and eradication. Such consolidation was found to promote animal health and welfare and high-quality research. As the quality of animal care increased, the health of the animals improved and influences of intercurrent infection on research results became apparent. Also scientists began to insist on improved animal care, especially because investigators' papers had been rejected on the grounds that they could not submit adequate information about the disease status of the animals used in their studies. Now, because rigorous disease monitoring is conducted in centralized ARFs, investigators can respond by providing animal-health data maintained in the ARF. This improved health monitoring can be delivered reliably and economically only in a centralized ARF. The ARF is now an integral part of the research program. Better environmental control reduces the biologic variability in animals' responses to extraneous factors; this permits the use of fewer animals to detect treatment effects and improves the reproducibility of research results. The extensive use of genetically modified animals (such as transgenic or gene-knockout mice) to investigate the effects of a given gene product on a whole organism, often called “functional genomics,” has resulted in a sharp increase in the involvement of investigators and their colleagues in the ARF. The research conducted on an animal begins on its arrival and remains a continuous phenomenon independent of the location of the animal facility or its association with laboratory space used for other phases of the research investigations. Thus, a modern centralized ARF provides high-quality animal research and care under carefully controlled circumstances for animals that are used by researchers, their staff, and students. Animal-based research treats or manipulates animals and observes the effects of these interventions in an ARF's primary enclosures –cages, pens, stanchions, boxstalls, and aquariums. Research animals also are moved to designated test environments within an ARF. The space used to breed, rear, exercise, and house animals according to their

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance behavioral needs during the conduct of research is an integral part of an individual investigator's research space. Other spaces in an ARF—such as surgery, treatment, and preparation rooms and behavior-observation chambers—are all integral parts of an investigator's research program. Thus, ARFs are not complex or specialized facilities used by only a few, but are research spaces that, at most institutions conducting biologic research, are used by most investigators and their staff and students at one time or another during the course of a project. Nor are they stand-alone facilities that merely house animals awaiting transfer to other laboratory sites where some aspects of research may be conducted. There are obvious substantial benefits to consolidation of animal facilities: economies of scale, elimination of equipment redundancies, efficient use of space, improved facility security, enhanced personnel health and safety, lower cost of regulatory compliance, and ease of maintaining accreditation through peer review by AAALAC. The federal government also realizes financial savings through the existence of centralized ARFs in another manner: these facilities can support the disparate and unique research needs of several disciplines. When animal facilities are based in research laboratories, changing research directions creates a periodic need for space renovations to meet newly defined requirements, and the costs of these renovations are eligible for inclusion in the F&A calculation. An ARF can be constructed to meet many types of research needs without renovation. Thus, centralization obviates repeated renovations and reduces costs to the federal sponsor. PROPOSED GUIDING PRINCIPLES The committee believes that three principles should be followed in establishing guidelines for handling ARF F&A costs: The cost-recovery system should provide incentives, and should not provide disincentives, for high-quality animal research that meets all applicable federal and state safety and security regulations and should recognize the need for high-quality animal research in the genomics and postgenomics eras. The basis of budget estimates in grant proposals and charges to the grants should be consistent regardless of whether research is conducted in centralized facilities or in decentralized, investigator-managed research laboratories. A transition mechanism should be provided to ensure that multiyear research projects are not disrupted by changes in the application of Circular A-21. If F&A costs are to be recovered by increasing per diem rates, investigators with funded grants will have to either decrease use of animals in research, seek additional funds from outside sources, or ask institutions for interim funding, thereby increasing the institutions' subsidy of the ARF.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance CONCEPTUAL ALTERNATIVES OF IMPLEMENTATION The committee examined two alternative concepts for allocating cost of an ARF to cost centers. Alternative 1: Fully loaded direct costs for ARFs. All the costs of centralized ARFs, including direct costs and F&A costs, would be recovered by the per diem charges to animal-based research projects. This is the current interpretation of Circular A-21 supported by OMB and used by federal auditors and rate negotiators (people who use OMB's policy to determine the indirect cost rate as a percentage of direct costs). Alternative 2: Consistency between ARFs and other institutional research facilities. Components of F&A costs would be treated in a manner consistent with that in other research facilities and incorporated into institutions' F&A cost rates. F&A components associated with ARFs that are not analogous with components associated with other research facilities, if any, would be treated as service facilities and their costs allocated to direct per diem charges. This alternative is the original CARS Committee position. EVALUATION OF FULLY LOADED DIRECT COSTS (Alternative 1) In this alternative, a centralized ARF, in its entirety, would be considered as a specialized service facility. All identifiable costs of the ARF would be incorporated into per diem rates charged to researchers on the basis of the number of animals or animal cages used. However, decentralized laboratory animal facilities (that is, facilities near or in investigators' laboratories) would be treated, for cost and payment purposes, like any other type of research facility; the implications are reviewed later in this report. On the basis of its review of per diem charges at selected universities before and after ARF costs were fully loaded into per diem charges, the committee believes that full loading of all ARF costs into per diem rates results in roughly doubling the per diem charges. The likely substantial increase in per diem charges would require that federal-agency program managers revise their expectations regarding amounts of direct costs for animal use in an average grant. Using the fully loaded direct-cost principle has several advantages. Full-cost loading in per diem charges achieves the objective of charging costs directly wherever possible and eliminates the contribution of ARF costs to the F&A cost pool. Fully loaded per diem rates for animal-based research avoid any real or perceived cross-subsidies between animal-based research and other kinds of research. Furthermore, fully loaded per diem rates make individual researchers aware of the full costs of using animals in research and encourage cost containment.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance However, this committee believes that fully loading the facilities costs of ARFs into per diem charges has a major conceptual flaw: it would be inconsistent with the practices for recovering facilities costs for other types of research facilities. The implied distinctions between research laboratory facilities and research animal facilities are artificial and arbitrary; the analogies between them are valid and broad and thus justify their similar treatment with respect to the recovery of costs. Beyond the inconsistency in the treatment of various types of research space, using a fully loaded direct-cost principle has several other important disadvantages. First, fully loading all ARF costs in the per diem rates increases direct research costs. This encourages researchers to keep animals dispersed in other research areas, whose costs are included in institutional F&A cost rates, and thus avoid incurring the per diem costs for centralized facilities. The dispersion of animal facilities in this manner leads to inefficient use of space and labor and, hence, is associated with increased costs beyond the sum of the direct and indirect costs (Pounds 1996). Second, reliance on animal facilities that do not have centralized management by well-trained veterinarians and staff is associated with substandard care of animals and produces “weakened” animal models (Jacoby and Lindsey 1997) that are less apt to produce scientifically valid results. Dispersed facilities cannot economically maintain and might not have the expertise to maintain surveillance systems for clinical and subclinical infections (Jacoby and Lindsey 1997) and so would increase the risk of intercurrent infection. Such infections can lead to invalid results and waste of large numbers of animals. Because AAALAC accreditation assesses the quality of an animal care program and because decentralized programs tend to be of lower quality, any factor that leads to dispersion of ARFs would adversely affect AAALAC accreditation. Third, some services needed by an institution are difficult to attribute to an ARF. These services include occupational-health and -safety and security programs for faculty, staff, and students. Those programs are expensive and are not specifically associated with animal research projects. For example, tetanus vaccinations are necessary not only for students and staff using animals, but also for those working in chemical and physical laboratories who suffer puncture wounds. Without such programs, institutions cannot perform any biologic or chemical research, even nonanimal research; the costs of complying with safety regulations rarely can be identified with specific projects. Thus, the total F&A cost support that can be legitimately requested by an institution potentially increases substantially with this alternative, and the quality of the overall animal care and use program, the quality of the research program, institutional flexibility and readiness for pursuing new research initiatives, and the opportunity for sound, consistent resource planning all decline. Public, institutional, and scientific interests seem ill served by this approach. Even in institutions with consolidated or centralized animal facilities, the full loading of facilities costs into per diem rates could create a strong incentive to cut costs, thereby decreasing the quality of essential programs, such as animal health surveillance, behavioral management, and cage-changing frequency.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance EVALUATION OF CONSISTENCY BETWEEN ARFs AND OTHER INSTITUTIONAL RESEARCH FACILITIES (Alternative 2): REVISED CARS MANUAL APPROACH In considering the various costs associated with ARFs, the CARS Manual revision committee organized the costs into three groups: Direct costs of providing the services of an ARF. Internal support costs, such as internal ARF administration, animal health care, and cage-washing. Institutional F&A costs, including space costs, general institutional administration, and costs of regulatory compliance. The CARS Manual committee originally concluded that per diem rates should include the first two categories—the direct costs of providing services and the internal support costs. It also felt strongly, however, that institutional F&A costs should not be in the per diem rates but should instead be recovered as part of the overall institutional F&A costs for research programs. That position was not fully accepted by OMB. The CARS Manual committee reached its conclusion for essentially the same reasons that have been discussed here as disadvantages of fully loading direct costs: there should be consistency with cost-recovery principles for other research space; increase in direct cost encourages investigators to move animals to their laboratories; lack of central management leads to decreased care and poor animal models; and it is more difficult to meet regulatory requirements. As a result of discussions with OMB, the CARS Manual committee is considering reclassifying some of the space in an ARF, such as cage-washing rooms and feed-storage rooms, as service-center space and including the cost of this space in the ARF per diem rates instead of the institutional F&A costs. The present committee should be classified as research space and the related costs included in the F&A costs. The space classified as research space would include not only the space where animals participating in research projects are kept, but also laboratories, procedure rooms, and other areas necessary to support the research. Moreover, there are analogous spaces in research laboratories whose costs fully qualify for inclusion in the indirect cost pool. The following pairs compare ARF areas with analogous areas in research laboratories: sterilizer and autoclave; cage-washing and glass-washing; feed and bedding storage and chemical storage; food or diet preparation and media preparation; cage and rack storage and equipment storage; surgical suite and tissue—preparation suite; procedure room and experiment room; necropsy area and tissue—culture area; and transgenic laboratory and molecular-genetics laboratory. We believe that the fragmentation

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance of F&A costs would be inconsistent with the treatment of like costs in a research laboratory facility and is therefore unwarranted and inappropriate. We believe that ARF space is the same as research space, that this is consistent with OMB policy; and that the policy therefore does not need to be rewritten. The treatment of regulatory-compliance costs related to animal research should be consistent with the treatment of all other regulatory-compliance costs, such as the costs of compliance related to human subjects and, occupational health and safety. The nonanimal-related compliance costs are included in F&A costs, and the regulatory-compliance costs related to animal research should also be in the F&A costs. Recommendations for animal care are found in the Guide for the Care and Use of Laboratory Animals, and recommendations for occupational health and safety are given in a companion document titled Occupational Health and Safety in the Care and Use of Research Animals (NRC 1997). OTHER CONSIDERATIONS The ostensible reason for the presumption that ARFs should be included in the definition of “specialized service facilities” in Circular section J.44 of Circular A-21 is the concern about shifting costs of animal research to other nonanimal research programs. The concern has been expressed by some federal officials that including institutional F&A costs associated with ARFs in the F&A cost pool would unfairly burden other research programs with a portion of these costs. That concern has been used to argue that the institutional F&A costs associated with an ARF should be included in the ARF per diem rates and thus be part of the direct costs of animal research or that a separate F&A cost pool should be established for animal research so that the institutional F& A costs associated with an ARF do not become part of the F&A cost pool for other types of research. This committee recognizes that different types of research require different levels of infrastructure support—for example, animal research and research not involving animals; research in wet laboratories and research conducted in offices; research involving human subjects and research without human subjects; and biomedical research and engineering research. The list is virtually endless. Government practice has long favored use of a single F&A cost pool for all research programs at academic institutions (except for “off-campus” programs that do not use an institution's facilities). That practice recognizes that the allocation of F&A costs is an averaging process and that any benefits arising from more precise costing would be far outweighed by further complicating a system that is already perceived by many as too complex. The committee endorses the long-standing practice and sees no reason to single out animal research in the classification or allocation of F&A costs. As stated elsewhere, the committee believes that institutional F&A costs related to ARFs should be handled in the same way as F&A costs of any other research laboratory. Although there are variations in support costs between animal research and other types of research, just as there are among

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance many types of research, we do not believe that this justifies treating F&A costs as inherently direct costs of animal research. As for the suggestion that a separate F&A cost pool should be established for animal research, the committee does not believe that this would be consistent with how F&A costs are handled in other situations that involve variations in support costs for different types of research programs or with the F&A cost averaging concept. CONCLUSIONS In the view of this committee, there are compelling reasons for the identical treatment of ARFs and research laboratory facilities under OMB Circular A-21. Furthermore, the committee feels that classifying an ARF as a “specialized service facility” is misguided and reflects a lack of understanding of the nature of contemporary animal research. Research investigators use animals in centralized animal facilities as an integral part of their research programs and as a direct extension of their laboratories. Thus, centralized ARFs are a part an the institution 's biologic and biomedical laboratories. The space in an animal facility is used to conduct research, as is space in any other research laboratory. The cost of other laboratory space is included in the F&A cost pool, so it would be inconsistent to treat the costs of ARF space as direct costs in per diem rates. In the same vein, institutional administrative costs associated with regulatory compliance and other administration services should be treated in the same way for ARF as for other research activities and, therefore, included in the institutional F&A costs. We also note that Circular A-21 asks for consistency in cost allocation to direct or F&A. For reasons of consistency, the present committee disagrees with the cost-allocation compromise being considered by the CARS Manual committee. Including those costs in per diem rates would drive up the direct costs charged to investigators' grants when centralized ARFs are used and would provide a strong financial incentive for investigators to return to keeping animals in their individual laboratories rather than in centralized ARFs. Dispersed animal colonies make institutional oversight more difficult and ultimately run counter to the mutual interests of scientists, federal agencies, and the paying public in promoting cost containment and the prudent use of public funds. Dispersed research facilities is also likely to have adverse effects on the care, health, and welfare of animals and the quality of research. The committee recommends that the total F&A costs of an ARF be recovered from the indirect cost pool in the same way as the cost of other laboratory research space. The committee will next analyze the cost components of ARFs at selected institutions to identify major cost items and recommend methods for containing or reducing those costs.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance REFERENCES Jacoby, R.O. and J.R. Lindsey. 1997. Health Care for Research Animals is Essential and Affordable.The FASEB Journal 11:609-614. NRC (National Research Council) Institute for Laboratory Animal Research Committee to Revise the Guide for the Care and Use of Laboratory Animals. 1996. Guide for the Care and Use of Laboratory Animals,7th edition. Washington, DC:National Academy Press. NRC (National Research Council) Institute for Laboratory Animal Research Committee on Occupational Safety and Health in Research Animal Facilities . 1997. Occupational Health and Safety in the Care and Use of Research Animals . Washington, DC: National Academy Press. T.M. Pounds. 1996. Laboratory Animal Cost at CIC Member Schools. Ohio State University Office of Research for the Committee for Institutional Cooperation, unpublished data.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance Appendix COMMITTEE ON COST OF AND PAYMENT FOR ANIMAL RESEARCH Biographical Sketches Christian E. Newcomer, Chair. Dr. Newcomer is Director of the Division of Laboratory Animal Medicine and Research Associate Professor of the Department of Pathology and Laboratory Medicine of the University of North Carolina. Dr. Newcomer is the immediate past president of the American College of Laboratory Medicine and Vice President of the Council on Accreditation, Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC) International. His research interest is the infectious diseases of laboratory animals. Frederick W. Alt is a Howard Hughes Medical Institute Investigator, Charles A. Janeway Professor of Pediatrics and Professor of Genetics at Harvard Medical School and Children's Hospital, and a Senior Investigator at the Center for Blood Research in Boston. He studies the molecular and cell biology of immunity. He sits on the editorial boards of Molecular and Cellular Biology, International Immunology, Developmental Immunology, Advances in Immunology, Current Biology, Science and Immunity. He is a Co-Editor of Current Opinion in Immunology, an Advisory Editor for Journal of Experimental Medicine and a Contributing Editor for Molecular Medicine. He is a member of the National Academy of Sciences, the American Academy of Microbiology, and the American Academy of Arts and Sciences. Ransom L. Baldwin is Professor and Sesnon Chair of the Department of Animal Science of the University of California at Davis. His research interests are in ruminant digestion, physiology of lactation, nutritional energetics, mechanisms and quantitative aspects of regulation of animal and tissue metabolism, and computer simulation modeling of animal systems. He was a member of the ILAR Guide Committee. John Donovan is Senior Director of Worldwide Laboratory Animal Resources at Rh ône-Poulenc Rorer Pharmaceuticals, Inc. From 1986 to 1994, he was Director of the Office of Laboratory Animal Science at the National Cancer Institute, National Institutes of Health. He is a Diplomate of the American College of Laboratory Animal Medicine (ACLAM) and was President of ACLAM 1994-5. Janet Greger is Associate Dean for Research of the Medical School and Professor of Nutritional Sciences and Environmental Toxicology of the University of Wisconsin. She has chaired the all campus animal care and use committee at the University of Wisconsin and is on the Board of Trustees of AAALAC (1992-1997), serving on their strategic planning committee in 1996. She was also on the Board of Directors of the Council on Government Relations and was a member of the NRC committee that wrote the report on Nutrient Requirements of Laboratory Animals, fourth edition.

OCR for page 1
Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance Joseph Hezir is a Managing Partner of the EOP Group, Inc. and was a co-founder of the Group. He was associated with Office of Management and Budget for 18 years, ending there as Deputy Associate Director for Energy and Science. He specializes in regulatory strategy development and problem solving, and identifying newly created government business opportunities formed from mergers, acquisitions, joint ventures and new markets. Josh Steven Meyer is the managing principal of GPR Planners Collaborative, Inc. and a Registered Architect in the State of New York. Mr. Meyer has participated in the programming and planning of sixty major research projects and over forty animal facilities for academic, institutional and corporate clients. His assignments include existing facilities analysis, facilities master planning, and macro- and micro-level development of laboratory, pilot plant, animal and toxicology facilities. Robert B. Price is Executive Vice President for Administration and Business Affairs of the University of Texas Health Center. He has an extensive background in higher education, having held various positions at Texas Tech University, The University of Texas at Arlington, and the Health Science Center at San Antonio. He also was a member of the Board of Directors of the Council on Government Relations 1979-1986 and is currently Chairman of the Board. James R. Swearengen is Director of the Veterinary Medicine Division of the U.S. Army Medical Research Institute of Infectious Diseases. He has extensive experience in directing multi-species animal care and use programs, supporting medical and surgical research and interfacing with scientific investigators. He has been involved in designing and providing oversight for the construction of animal care and research facilities. Gary Talesnik is a Management Consultant for KPMG Peat Marwick. He was Director of the Office of Grants Management at the U.S. Department of Health and Human Services and worked extensively with the Office of Management and Budget on the development of cost principles for universities, State and local governments, and nonprofit organizations. He has consulted with numerous institutions on cost accounting and other areas related to the financial management of grant and contract programs. John Vandenbergh is a Professor, Department of Zoology, North Carolina State University. His research areas are environmental control of reproduction, the endocrine basis of behavior, and rodent and primate behavior. He was a member of the committee to revise the Guide for the Care and Use of Laboratory Animals and has been on review panels for NSF and NIH. He is a member of American Society of Zoologists, American Behavior Society (President 1982-83), and Society for the Study of Reproduction.