Millions are lost on contract research

November 10, 1995

Higher education is losing out on millions of pounds in income because universities fail to achieve full-cost recovery when undertaking contract research work for industry, government departments and the public sector.

The finding is based on details of income submitted by institutions to the Universities' Statistical Record for 1993/94. It suggests that universities are unwittingly undercutting each other in the hunt for research income.

The analysis shows that when undertaking commissioned research, universities are not recovering proper contributions to their overhead costs to support their laboratories, libraries, computer services and administration.

When calculated according to the recommendations of 1988 Hanham report by the Committee of Vice Chancellors and Principals, a typical university overhead rate is 100 per cent on top of the salary costs of the research project teams.

The statistics show that Imper-ial College, London is the only institution among the "top ten" research institutions based on total research income to achieve more than 50 per cent recovery in overheads as a percentage of salaries.

Even Imperial achieved only 69 per cent recovery on overheads. Oxford University realised 34 per cent; Edinburgh 24 per cent; Glasgow 22 per cent; King's College, London, 24 per cent; Cambridge 28 per cent; Manchester 37 per cent; Nottingham 47 per cent; Southampton 43 per cent and the British Postgraduate Medical Foundation 18 per cent.

Medical schools in London performed particularly badly with at least four having recovery percentages under 8 per cent.

The calculations exclude sponsors such the European Union, research councils and charities which fund projects on non-negotiable terms.

Among other institutions, Aston University achieved 90 per cent overhead recovery. However, this is based on a total income of Pounds 3.35 million. Oxford achieved its 34 per cent overhead recovery on an income of Pounds 84.6 million and has a more "blue skies" research portfolio.

Southampton University achie-ved a recovery of 43 per cent on an income of Pounds 32 million.

Among the "top ten", the statistics suggest that if Edinburgh had achieved the same recovery percentage as Imperial it would have been Pounds 3.4 million better off. Cambridge would have secured an extra Pounds 2.47 million.

The Committee of Vice Chancellors and Principals said it is "well aware" of the problem highlighted by the statistics and that it was working on further guidelines on the costing and pricing of research that will advance recommendations made in the Hanham report.

A CVCP spokesman said, however, that it was necessary to draw a distinction between contract research where institutions should aim to recover at least full cost and collaborative work where sharing of full costs need to be agreed with the partner.

The CVCP said that recovery figures for individual institutions should also be treated cautiously because they cannot adequately reflect the variety of missions and ways in which research funds are allocated internally.

"Nevertheless the CVCP accepts there is room for substantial improvement in recovery of costs for research sponsored by outside bodies," said the spokesman.

He added that a serious problem for universities is that research sponsors are reluctant to meet full costs. "We recognise there is a need to realistically assess the cost of research activities sponsored by external bodies, particularly industry and government departments, with due regard to individual cases."

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