On a system's level, that's probably the desired outcome in a world where total science funding is shrinking and fewer people can be employed as scientists.

In your example, I'd be more worried about the case where the specialized design reviewer knows what the available sources of grants are and procedure to apply to them, and the professor has since forgotten that knowledge, and so the department now cannot bring in any grants or revenue. That'd kill science even at established institutions like MIT or Yale or Harvard, even if they have very good researchers.