There are two factors to federal grants paid: One covers the direct costs of conducting research, paying for salaries, equipment, and consumables such as chemicals and enzymes. But the government also pays what is called an indirect cost. These are sent to universities and research institutions to cover the costs of providing and maintaining laboratory space, heat and electricity, management and HR capabilities, and more.
These indirect costs were negotiated with each research institution and on average nearly 30% of the amount awarded for the study. Some institutions consider the indirect rate to be half the value of the grant.
Friday, National Institutes of Health (NIH) announcement The negotiated fees had ended. All existing grants, as well as all future funded grants, are expected to have an indirect cost rate of just 15%. With no warnings and no time to adapt to policy changes, this proves to be catastrophic for the budgets of almost every biomedical research institution.
Cut it in more than half
The new policy is explained in a supplemental guidance document that changes the 2024 grant statement. The document is cited Federal regulations This allows the NIH to use indirect cost rates that differ from those negotiated with the research institution for either a “federal award class or a single federal award”, but it must justify the decision . Therefore, many of the documents explain indirect costs paid by charitable foundations, which are far lower than the rates paid by the NIH.
The new rate of indirect costs applies to newly funded grants and retroactively apply to all existing grants starting with the issuance of this notice. The retrospective nature of this decision may be challenged due to the aforementioned regulations language. It also states that “federal agencies should include policies related to indirect cost rates in funding opportunities.” But this could continue to cut down on US biomedical research seriously.
