While there are classes of grants with different levels of funding, the grants are generally considered on their own merits and not based on how much overhead a the recipients institution would charge. Thats a side negotiation.
It's a side negotiation that, as I understand, happens through a different process, set down by law. But there's still a process, and contracts have been made by the parties involved, and there's a legally mandated timeline for renegotiating those contracts that is not being followed.
You are right that it is different from how the private sector operates. The private sector does not even let you think about negotiating either their overhead or profit margin.
Does the NIH not, like, compare proposals before deciding on whether to pay for them?
> To pretend NIH grants are anything remotely like normal private sector contractors
Please enlighten us to the differences that are at all pertinent to this question. Specifics, not vague scare quotes.