The document is a formal communication from the Council on Governmental Relations (COGR), representing a broad range of U.S. research universities and institutes, to the National Science Foundation (NSF) concerning an audit finding by the NSF Office of Inspector General related to the application of Facilities and Administrative (F&A, or indirect) cost rates on NSF grants. COGR expresses appreciation for its longstanding relationship with NSF but details concerns arising from an audit interpretation that mandates the use of the negotiated indirect cost rate in place at the time of a grant award for the entire award duration. COGR points to federal regulations and Office of Management and Budget (OMB) memoranda which allow some degree of flexibility, particularly noting recent federal guidance (FAQ #132) that institutions may voluntarily apply a lower F&A rate than negotiated, provided there is no coercion from federal agencies.
COGR argues that institutional flexibility in applying F&A rates post-award is crucial for protecting principal investigators (PIs), ensuring the integrity of their direct cost budgets, and accommodating special circumstances—such as PI transfers to new institutions or changes in negotiated rates. The letter calls for NSF policy to formally allow such flexibility without risk of adverse audit findings, underscoring that this approach is supported by federal guidance and best serves both universities and the NSF’s research mission. COGR requests an open dialogue with NSF policy leaders to reconcile perspectives and clarify practical implementation, emphasizing partnership and mutual benefit.
