After pressure from university administrators, the Office of Management and Budget (OMB) has issued a new plan for saving money on research overhead costs, in place of a controversial proposal that was originally published in February 1986 (Eos, May 20, 1986, p. 481). The agency made the new plan more palatable to administrators and faculty by choosing to cap the rate of reimbursement for the activity that researchers say they find among the most difficult to document: the time they spend on administration of federally sponsored grants and contracts. An amendment to a bill signed by President Ronald Reagan on July 2 might force OMB to make additional concessions to colleges and universities.

How much money the federal government would save under this policy is a matter of dispute. The agency's revisions to OMB Circular A-21, “Cost Principles for Educational Institutions,” call for fixing the reimbursement rate at 3% of modified total direct costs for departmental administration work done by “department heads, directors of divisions faculty, and professional staff.” The 3% figure represents about half of the current national average rate of reimbursement for these costs and would lead to federal government savings of $100 million a year, according to OMB.