And government-funded research is a vulnerable target for federal budget cutters, causing administrators and researchers to question the future of higher education's relationship with its federal sponsors.

* Will Congress lower the amount of money given to research?

* Will the National Institutes of Health--the major source of research money for medical institutions--abandon "indirect cost-blind" peer review, with science taking a back seat to funds?

* Will the White House seize the opportunity to take away a perceived cash cow from the universities and add significant restrictions to Circular A-21?

* Most importantly, will the regulatory agencies that set indirect cost rates decide to greatly reduce the rates they hand down to universities?

HHS, which sets Harvard's indirect cost rates, has already given a tentative answer to the last question.

Last month, HHS decided that the ongoing negotiations for a new rate were not going well, choosing unilaterally to reduce the Medical School's provisional rate of 88 percent to 63.5 percent.

Last year, when Harvard's negotiated rate with HHS was 77 percent, the Medical School received $19.2 million in direct federal dollars and $13.5 million in indirect cost reimbursements. This year, the University expects direct funds of about $20.1 million and has requested $18.8 million in indirect cost reimbursements, or 96 percent.

If HHS were to set a permanent rate near 65 percent, Harvard would receive about $6 million less per year than it has asked for in indirect cost reimbursements.

"If that money is arbitrarily cut, it could be very damaging," Fields says. "At research-intensive places, the indirect costs have to be high."

If HHS were to hand down a lower rate, says Vice President for Finance Robert H. Scott, "We'd have to change the cost structure of the Medical School."

Harvard would have to redouble its fundraising efforts, reduce its funding for maintenance at the Medical School and cut administrative costs, Scott says.

Harvard is not asking the government to cover expenditures not related to research, Scott says. "We are asking them to pay for the space they use."

Changing the Rules

While the government considers how to best alter the indirect cost regulations, Scott, Fields and R. John Collier, Presley professor of microbiology and molecular genetics, are concerned that the government has already changed the "ground rules" with respect to indirect costs--that the government is not maintaining "its side of the bargain."