Connecticut Attorney General William Tong and 21 other attorneys general today sued the Trump Administration, the Department of Health and Human Services, and the National Institutes of Health (NIH) over new guidance on indirect costs (e.g., depreciation, interest on debt, general administrative expenses) at universities and research institutions across the country that would bring such costs in line with market rates.
Pursuant to the new guidance, there will be a standard cost rate of 15% across all NIH grants for indirect costs in lieu of a separately negotiated rate for indirect costs in every grant.
Per NIH, it is “obligated to carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people and improve their quality of life. Indirect costs are, by their very nature, ‘not readily assignable to the cost objectives specifically benefitted’ and are therefore difficult for NIH to oversee.”
The indirect cost rate reported by NIH has averaged between 27% and 28% over time. And many organizations are much higher—charging indirect rates of over 50% and in some cases over 60%.
Most private foundations that fund research provide substantially lower indirect costs than the federal government, and universities readily accept grants from these foundations.
For example, a recent study found that the most common rate of indirect rate reimbursement by foundations was 0%, meaning many foundations do not fund indirect costs whatsoever. In addition, many of the nation’s largest funders of research—such as the Bill and Melinda Gates Foundation—have a maximum indirect rate of 15%. And in the case of the Gates Foundation, the maximum indirect costs rate is 10% for institutions of higher education.
Hellbound and Down 