BFA Update

National Science FoundationAdvisory Committee for Business and

OperationsNovember 18, 2004

Tom CooleyNSF Chief Financial Officer

Director, Office of Budget, Finance, and Award Management

Major Events Since March ‘04• BFA Realignment – Completed

– Now 5 Divisions (previously 4)– Enhances focus on award monitoring and

handling of complex awards.

• Advisory Committee for GPRA Performance Assessment – June 22-23– Significant Achievement by NSF for all four

strategic outcome goals.– Incorporated findings re: Organizational

Excellence from June AC/B&O teleconference.

Major Events (continued)

President’s Management Agenda Scorecard: Proud to Be Exercise

• Human Capital

• Expanding E-Gov.

• Competitive Sourcing

• Financial Performance

• Integrating Budget and Performance

R

G

G

Current

G

G

PTB – July 05

G

Y

Y

Y

G

Major Events (continued)

• FY 2004 Performance and Accountability Report

• Submitted Nov. 15• Clean Opinion• Two Reportable

Conditions– Post-Award Administration– Contract Monitoring

Unfolding Issues

• FY 2005 Appropriations– Full Year CR?– Omnibus?– Funding for NSF?– Proposed change in funding for IPAs?

• FY 2006 Budget Process– Outlook for Domestic Discretionary?

• Breaking News: NSF CFO to chair new CFO Council Committee on “Grants Governance”

Cost Sharing: UpdateCost Sharing: Update• Historical Perspective:

– NSF’s use of cost sharing was derived from the desire to bring additional resources into the R&D enterprise from outside sources.

– Cost sharing also was viewed as a valuable mechanism for affirming the longstanding partnership between colleges and universities and the Federal government.

– Over the past 5 years, NSF and the NSB have continued to discuss and reexamine this paradigm to best determine how and when the Foundation would require cost sharing in its programs.

Cost Sharing Data: FY 2000-2004Cost Sharing Data: FY 2000-2004

Fiscal C/S Dollars Awards Total Award%

Year Actions

FY2000 $508M 3109 19,789 15.71

FY2001 $534M 3346 20,529 16.30

FY2002 $419M 3188 21,369 14.92

FY2003 $325M 2359 22,782 10.35

FY2004 $244M 1556 22,862 6.80

The Management Challenge on Cost The Management Challenge on Cost Sharing from the OIGSharing from the OIG

• Audits continue to reveal problems with cost sharing that include:– Shortfalls in contributions;– Instances of missing or insufficient

documentation; and– Systems that are inadequate to ensure their

proper accounting.• OIG recommends that NSF reexamine its

policies on the reporting of cost sharing and resolving of any questioned costs to better ensure compliance with Federal guidelines.

Research Business Models Research Business Models General Public Comments Relating to General Public Comments Relating to CostsCosts • A high priority is to strive to return to a costing and

regulatory system that is equitable, effective, and appropriately reflects diversity of research providers, even more pressing than to articulate new business models

• The principle of full cost reimbursement is vital to the partnership

• The two central considerations (in the research partnership) are:

1. costs, including how they are charged and compensated; and

2. administrative regulations, including how they are imposed and complied with

A New Perspective on Cost Sharing….

• Compliance mandates for universities and research institutions have increased substantially over the last ten years– Patriot Act, Select Agents, VISAs, Human Subjects,

HIPAA, Export Controls, Environmental Health and Safety

• Many recipient institutions are at or above the administrative cap in F&A and do not recover these increased costs of compliance– 85% of major universities are at or above the cap– 20 of these institutions lost about $46M in under-

recovery in FY2000– 25 universities estimated they would spend $411M

total or $16.5M per institution for increased compliance 2000-2005 year

A New Perspective on Cost Sharing (Cont’d)

• Many small, baccalaureate, and minority serving institutions do not have the financial resources to cover the costs of compliance and participate in cost sharing:– Testimony from small institutions in the RBM process

addressed the tradeoff between hiring faculty versus participating in cost sharing in order to apply for NSF instrumentation support or other initiatives; and

– These dilemmas will increasingly drive a “have and have not situation” among institutions

• The original premise behind imposition of cost sharing (the addition of resources to the research enterprise) no longer appears valid.

Options Presented to NSF Senior Options Presented to NSF Senior

Mgmt.Mgmt. • Maintain the status quo;

• Permit imposition of cost sharing only for certain types of awards:

– Instrumentation/infrastructure; and/or– Centers/Facilities; and/or– Instructional materials/curriculum development; or

• Permit imposition of statutory cost sharing requirements only, thereby eliminating all program specific cost sharing

RecommendationRecommendation

• NSF recommends that the NSB approve a revision to the current Board policy on cost sharing to eliminate program specific cost sharing, and require ONLY statutory cost sharing.

• Adopted by NSB – October 2004