This memo covers the recent HHS announcement regarding Facilities and Administration (F&A) rate change as well as relevant Congressional legislation related to the topic. It also analyzes possible next steps, including likely legal and Congressional challenges to this executive action. We expect this issue to continue to develop over the next several weeks and months, and we will update you on developments and work with you to discover the best way forward that protects your research enterprise.
NIH Action on Indirect Cost Rates (i.e. “F&A”)
On Friday, Feb. 7, 2025, the National Institutes of Health (NIH) released Notice Number NOT-OD-25-068, “Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates,” announcing a deviation from the negotiated indirect cost rate. The Supplemental Guidance stipulated that there will be a standard indirect rate of 15% across all NIH grants for indirect costs in lieu of a separately negotiated rate for indirect costs in every grant. This rate would apply for “any new grant issued, and for all existing grants to institutions of higher education retroactive to the date of issuance of this Supplemental Guidance…. This policy shall be applied to all current grants for go forward expenses from Feb. 10, 2025, forward as well as for all new grants issued.” NIH will not be “applying this cap retroactively back to the initial date of issuance of current grants to institutions of higher education.”