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AAMC Calls OMB Cost Allocation Notice “Major Disappointment”

April 6, 2012—The AAMC April 3 submitted comments on the Office of Management and Budget (OMB)’s “Advanced Notice of Proposed Guidance (ANPG)” issued on Feb. 28 and titled Reform of Federal Policies Related to Grants and Cooperative Agreements; Cost Principles and Administrative Requirements (including Single Audit Act) (77 FR 11778).  The notice proposes fundamental changes to the structure, scope, and terms of the cost principles and administrative requirements governing federal grants, cooperative agreements, and some contracts [see Washington Highlights, March 2].

In its response, the AAMC said, “The current ANPG is a major disappointment in that it does not focus on strengthening the federal-academic research partnership, but rather it appears almost exclusively focused on reallocating federal expenditures. The viability of this partnership is critical to advancing new treatments for disease and for catalyzing innovation in health care.”

The AAMC also said, “The Notice is timid in proposing the type of grants management and cost allocation reforms that have been advocated by the research performing community and Federal agencies alike, such as scuttling the current Time and Effort Reporting paradigm. Many of the bold reform proposals that apparently have been rejected, such as effort reporting, could have resulted in budgetary savings to both funding and audit agencies and research performers, while at the same time enhancing real accountability.”

AAMC made specific comments on OMB’s proposals regarding flat and discounted Facilities and Administrative (F&A) cost rates, Time and Effort Reporting issues, direct reporting, Single Audit thresholds, voluntary cost sharing, F&A consistency, the Utility Cost Adjustment, the consolidation of OMB Circulars, and government-wide information collection standardization.

AAMC said that “OMB’s ANPG ignores fundamental tensions and problems in the current cost allocation framework, many the result of legacy policies that do not reflect the current ability of research institutions to manage and allocate costs more effectively and accurately. Instead, OMB has proposed initiatives that could well exacerbate tensions in the partnership, while delaying needed and rational reforms for another day.”

OMB March 26 announced it has extended the comment period on the ANPG, which was scheduled to end on March 29, until April 30.


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806