The document outlines recent policy changes implemented by the Department of Energy (DOE) regarding the reimbursement of indirect costs under financial assistance awards. While the policy explicitly exempts Institutions of Higher Education (IHEs), it imposes significant limitations on indirect cost recovery for other recipient types, such as state and local governments (capped at 10% of total award amount), and nonprofit and for-profit organizations (capped at 15%). These caps encompass both indirect costs and fringe benefits and apply universally to all budget periods, excluding certain entities like Tribal Organizations, Federally Funded Research and Development Centers, and IHEs. The policy revisions are intended to save substantial taxpayer funds, with estimates suggesting annual savings of up to $935 million.
Legal challenges have significantly impacted the implementation of these policies. For IHEs, a coalition of academic organizations and universities successfully obtained a preliminary injunction and subsequent final judgment against the 15% cap, with the court finding the DOE’s action in violation of the Administrative Procedure Act (APA); the case is currently on appeal. Meanwhile, similar litigation by states against caps for non-IHE entities has resulted in favorable rulings for the plaintiffs, with courts finding the DOE’s caps unlawful. Despite these ongoing legal disputes, the revised DOE policies continue to affect collaborations between IHEs and non-IHE partners, as the latter are still subject to the cost caps unless covered by litigation. The outcome of these cases—and potential revisions to federal regulations—will further clarify the long-term landscape for indirect cost reimbursement. COGR, in coordination with other research advocacy associations, remains actively engaged in addressing these federal policy developments and their implications for research institutions.
