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The Black Hole

Funding repercussions of U.S. debt showdown – 2013 edition


In light of the present circumstances, I thought I would interrupt my ongoing series on federal funding of basic research in Canada and take the opportunity this week to update you on the current status of science funding in the United States amid another looming fiscal showdown. The 2014 fiscal year in the U.S. begins Oct. 1 and requires Congress to pass a spending bill to allow federal agencies to remain open. Later this month, on Oct. 17, Congress will be required to pass another bill increasing the American government’s $16.7-trillion debt ceiling to avoid default.

By now I expect we are all familiar with the consequences of inaction on both milestones and I won’t belabor the point here (For past discussion please see “Cause and effect in scientific funding,” and “What happens when you insufficiently fund basic research“). Instead I want to comment on the fallout as it affects NIH funding in the U.S. It is difficult to predict whether agreement will be reached to avert a government shutdown and funding lapse before Oct. 1 and the NIH has provided some guidance with respect to the expected fallout.

While spending may continue on active grants and contracts funded for fiscal year 2013 or prior following a shutdown, principal investigators are recommended to limit spending to what was set forth in the fiscal year 2013 grant year budget. Additionally, during any shutdown period, PIs may not make budgetary or other changes that require prior approval as there will be little or no agency staff available to provide such approvals. Expenditures made without the requisite prior approval during the shutdown period are at risk, and may not be reimbursed once the government reopens.

At the moment of this writing, there is no definitive information on whether reimbursement will be possible for fiscal year 2014 award spending that occurs before the shutdown is resolved. However, my institution has recommended that if we receive a stop-work order from a federal sponsor that we cease working on the project and work with our research management office to implement the government’s directive. You can imagine how disruptive this will be to time-sensitive research studies, particularly if they are at the forefront of scientific discovery and therefore in direct competition with other equally aggressive research programs worldwide. Thankfully, some clinical trials may qualify for “excepted” categories where work and financial support can continue in absence of an appropriation because of statutory requirements, safety, or national security. NIH intramural clinical trials appear to fall into this category.

Another complicating issue that may be of relevance to Canadians is the status of collaborators working under subcontract with American institutions. My understanding is that American hospitals and research institutes are generally under no obligation to provide FY-2014 funding during a lapse in federal appropriation, although subcontractors may continue to spend FY-2013 funds. Amendments extending subcontracts based on anticipated fiscal year 2014 funding will likely not be processed until after the shutdown has been resolved and the appropriate renewal notice of grant award has been received from the agency. For Canadian post-docs on NIH grants commencing fiscal year 2014, this could mean returning home as J1 and H1B visas are dependent on employment status.

Lastly, while the system will be operating during a funding lapse and will accept and store NIH grant applications, these applications will not be processed until funding has been approved and normal business operations are restored.

Any government shut-down will undoubtedly have far-reaching implications on the American economy and influence markets worldwide; the research community will be waiting with bated breath to see how this year’s American financial crisis plays out.

In the meantime, I will be continuing with my article series in my next post.

Jonathan Thon
Jonathan Thon is a serial entrepreneur and founding CEO of STRM.BIO. Before STRM.BIO Dr. Thon founded Stellular Bio where he served as CEO and chief scientific officer. Before Stellular Bio, Dr. Thon was an assistant professor at Harvard Medical School.
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