In early February, the Trump administration issued new guidance on facilities and administration (F&A) costs – also known as indirect costs – at the National Institutes of Health (NIH), setting the maximum rate at 15 percent. This change set off a firestorm of debate about F&A costs, leading to the formation of a committee charged with developing a new and improved funding model.
NIH intended for the cap to go into effect on February 10, but several Democratic State Attorneys General quickly filed a motion for and were granted a temporary restraining order. Furthermore, several Members of Congress – including Republican Senators Susan Collins (R-ME) and Katie Britt (R-AL) – pushed back against the policy, questioning the legality of the move given that, per appropriations legislation, only Congress has the power to change NIH F&A cost rates. The fiscal year 2025 continuing resolution retained the language that protects F&A reimbursement rates at NIH.
Many experts agree that the current F&A reimbursement model is not perfect but disagree with the administration’s decision to “fix” it by setting this cap. Instead, they have called for a thorough analysis of the current system’s limitations and potential improvements.
[Learn more about indirect costs here: COGR’s F&A Cost Reimbursement Materials]
Several national organizations – including the Association of American Universities (AAU), the Association of Public and Land-grant Universities (APLU), the Association of American Medical Colleges (AAMC), and the Council on Governmental Relations (COGR) – have joined together to form a committee that will develop a “more efficient and transparent model” for F&A costs on federal research grants. The goal of the committee is to submit a new indirect cost model to the federal government, “developed with full engagement of the research community,” that reduces regulatory barriers, is simple and easily explained, and increases transparency.
The committee includes nearly thirty experts on relevant topics such as grant administration, university operations and finances, and government relations. Kelvin Droegemeier, PhD – the former Director of the White House Office of Science and Technology Policy (OSTP) during the first Trump administration – will chair the committee. FABBS has learned that Representative Tom Cole (R-OK), Chair of the House Appropriations Committee, had asked Droegemeier to take the lead on this effort to better understand F&A costs, suggesting that the House may not blindly accept the 15 percent cap proposed by the administration.
Although NIH cannot enforce a standard maximum cap at this time, other agencies have made their own attempts to cut back. The National Science Foundation (NSF) recently announced an update to its indirect cost policy, implementing a standard 15 percent rate for all new awards and subawards. Unlike at NIH, F&A rates at NSF are not explicitly protected by Congressional appropriations language, but there is legislation governing how agencies should determine these rates. As a result, thirteen universities, led by AAU, filed a lawsuit on May 5 arguing that the new NSF cap violates that legally required process. The plaintiffs are seeking a permanent injunction against the new policy.
