University research is a vital building block of the nation's research and development (R&D) enterprise. While U.S. universities perform just 13 percent of total national R&D, they perform 31 percent of the nation's total research--basic and applied--and 56 percent of the nation's basic research. Because there is broad consensus that university research is a long-term national investment in the future, the federal government supports about 60 percent of the research performed at universities. In 2009, that amounted to the federal government supporting about $33 billion of universities' total annual R&D spending of $55 billion. Along with creating new knowledge and the foundation for new products and processes, U.S. universities use their research activities to educate students who will become the next generation's scientists and engineers, teachers, and leaders in government and industry. The following topics are addressed herein: how university research projects receive federal funding, the funding process and peer review, how the federal government manages research accountability, what costs of research the federal government covers, how the federal government determines F&A cost reimbursement, how cost reimbursement is restricted as administrative compliance requirements increase, and the process for using results of university research. A list of information sources is included.