AAMC's Follow-Up Letter to
OMB on Proposed Changes to OMB Circular A-21
[On September 10, 1997 the Office of Management and Budget
(OMB) published in the Federal Register (62 FR 47721) proposed
revisions to OMB Circular A-21, "Cost Principles for
Educational Institutions." The Association of American
Medical Colleges (AAMC) submitted a letter
of comment on the proposal on October 28. the following
is a follow-up letter was sent to the director of OMB on April
14, 1998. The OMB issued its final revisions to A-21 in the
Federal Register (63 FR 29786) on June 1, 1998.]
April 14, 1998
Mr. Franklin D. Raines
Director
Office of Management and Budget
Old Executive Office Building
17th Street and Pennsylvania Avenue N.W.
Room 252
Washington, D.C. 20503
Dear Mr. Raines:
We understand from various sources that the Office of Management
and Budget is preparing to go forward with its problematic
proposal to establish a new and elaborate review procedure
to be followed by federal negotiators in assessing the cost
of research facilities utilized in the conduct of federally
sponsored research (originally proposed on September 10, 1997,
62 FR 47721). We urge you personally to intercede and stop
this proposed change in OMB Circular A-21, "Cost Principles
for Educational Institutions" from happening.
As we noted in our formal comment
letter of October 28, 1997, the underlying premise of
the proposal is faulty and the proposed benchmarking methodology
is inappropriate. Perhaps more disturbing, however, is that
the final implementation of this proposal is being attempted
completely outside of the context of President Clinton's Presidential
Review Directive (PRD), which is seeking to address the increasing
tensions between research universities and the federal government.
While OMB is supposedly contributing to the review process,
the issuance of the facilities benchmarking proposal will
undermine the purposes of the PDR and compromise the ability
of the academic research community to take the PRD effort
seriously.
In comments we submitted on
August 15, 1997 to the Office of Science and Technology
Policy on the PRD, we stressed that a paramount objective
of that effort must be to solidify the basic rules governing
the government-university partnership. The cumulative effect
of cost shifting and rule changing is to make long term investments
in research and training capacity by research institutions
an increasingly risky gamble. Capacity once degraded cannot
be rebuilt quickly, if at all. The policies governing the
federal-academic relationship and the rules that follow must
be stabilized to allow the risks to universities of such enormously
expensive, long-term undertakings to be measured with confidence
and certainty.
The implementation of an untested and unwarranted facilities
benchmarking proposal at this time will instill a level of
uncertainty into the research facilities investment equation
that is likely to have significant and lasting negative consequences
to the research enterprise.
OMB has offered no evidence that educational institutions,
whether public or private, have constructed any facility that
is unreasonably costly and we are not aware of any data, even
anecdotal in nature, that would support such a conclusion.
Moreover, given the close scrutiny that state legislatures
give to proposed facilities projects in public institutions,
and the well-publicized difficulties faced by private institutions
in raising private funds for "bricks and mortar,"
we do not believe that there is any evidence that university
facilities projects have been extravagant or wasteful. We
believe the OMB is proposing to create a burdensome benchmarking
system to solve a non-existent problem.
In addition, we remain astonished, particularly given the
lengthy period that this proposal has been under consideration
by government officials, that the proposal is presented without
any credible, data-driven analysis modeling the impact of
the new proposals on universities and schools of medicine.
Such analyses would not appear to be a difficult undertaking,
and we are puzzled and troubled by OMB's failure to insist
on such to validate the specific methodology proposed, or
any other approach that might be conceived.
We appreciate your attention to our concerns. Please feel
free to call Tony Mazzaschi [tmazzaschi@aamc.org],
AAMC Division of Biomedical and Health Sciences Research (202-828-0059)
if we may be of further assistance.
Jordan J. Cohen, M.D.
President,
Association of American Medical Colleges
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