In 1998, Congress directed the White House Office of Science and Technology Policy (OSTP) to conduct an analysis of issues related to the ways universities recover the facilities and administrative costs (also known as indirect costs) they incur when performing research under federal grants and contracts. At OSTP's request, the RAND Science and Technology Policy Institute prepared this report to present objective information on facilities and administrative costs in U.S. higher education. This report addresses the issues raised by Congress, although its scope is limited to presenting factual information and analysis of alternatives. It does not take positions on policy options. The report should be of interest to scientists, higher education administrators, and federal, state, and local governments.