While I won’t argue there isn’t waste (what endeavor doesn’t have waste?) it’s an incredibly tiny percentage (except in cases where there was actual fraud, which we also discovered and the Feds prosecuted and convicted people for).
The irony is that academia is so afraid of “waste” that I wouldn’t be surprised if colleges spend more money on the auditing and the compliances, etc than the actual waste they prevent.
A big part of the reason indirect rates evolved is because the administrative burden to track direct costs is immense. How do you split up direct costs on an electric bill? Do you place a meter on each wall outlet and try to assign each amp to a specific job? Or safety training? Divide the safety meeting minutes by ….. ? It’s impossible. Which is why Vannevar Bush pioneered indirect costs. See the history section here:
https://www.cogr.edu/sites/default/files/Droegemeier%20Full%...
For example I know at my institution every dollar, every piece of effort, is painstakingly tracked and attributed to funding sources. We have extensive internal checks to make sure we aren’t misusing funds. Audits happen at every major milestone. All of that effort is reported. It’s exhausting but the government requires it because we have to be good stewards of the funds we have been granted. No one believes it.