Department of Health and Human Services Hospital Cost Principles for Federally Sponsored Research Activities

EXECUTIVE SUMMARY:

This final report points out the need to update Federal guidance on the application of hospital cost principles applied to research and development activity through grants and contracts. Current guidance was published over 25 years ago when the research environment and Federal funding rules were less complex. The current rules do not provide clear guidance for determining what types of costs should be allowed and how costs should be allocated. This results in hospitals making interpretations which expand the types and amounts of costs which could potentially be included in indirect cost rate proposals. We are recommending that the Assistant Secretary for Management and Budget act to modernize and strengthen the cost principles applicable to hospitals.

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