Dear Research Leaders and Colleagues,

The Office of Research and Innovation continues to track award disruptions and delays. We are aware of more than 165 research-related disruptions, which include grant terminations (both full and partial), funding freezes, stop-work orders, delayed Notices of Award, funding program terminations, and modifications to current awards. We actively track financial impact on awards that are terminated or require a full work stoppage, and are currently tracking 94 such awards, which represents a notable increase from previous weeks. The currently known financial exposure tied to outstanding grant balances for the current award period is approximately $24 million. This figure may be an undercount, as it reflects only obligated amounts tied to the current award period and does not include subsequent-year data for multi-year awards. ( This week’s full Research Impacts update is available here.)

The following updates address new terms, conditions or revisions from federal agencies:

  • Agency funding delays: Despite congressional testimony from NSF and NIH leaders about expediting FY25 funds, delays in distribution of new awards and award continuations persist. The Washington Post reported this spring that the pace of FY25 awards at NIH alone was lagging by over $3 billion compared to last year.  Additionally, a report by the Association of American Medical Colleges (AAMC) found that 2,282 NIH grants awarded to U.S. institutions have been terminated and not reinstated, representing nearly $3.8 billion in lost funding. This raises serious concerns about whether all appropriated funds will be distributed before the end of the fiscal year.
  • Additional scrutiny for funding: Adding to the delays are additional levels of scrutiny – for instance, grants are now reviewed at the Office of Management and Budget (OMB) level before any disbursement, which limits agency control and slows down distribution. The OMB is also in a heightened state of flux. Many of the office's web pages are in transition, and the page for OMB Guidance is currently blank.
  • NIH Terminated Awards may be Reinstated: On June 16, a Federal judge ruled that the termination of NIH funding for research on diversity-related topics was illegal and reinstated those grants. PIs whose grants have been terminated by the NIH should not resume grant activity until additional information is available.
  • IDC Caps:
    • DOD announced a 15% cap on indirect costs (IDC), also known as F&A. A judge has granted a temporary restraining order, and we continue to process all proposals and awards at UC San Diego’s full federally negotiated rate. We should not respond to requests from POs to recalculate budgets with a lower IDC rate.
    • NIH has delayed implementation of its announced 15% IDC cap through June 20, pending court decisions. Further extensions are expected if rulings are delayed. Although a final decision from the judiciary has not been made, the ongoing litigation is being closely monitored.  Proposals should be submitted at the full federally negotiated rate.
    • NSF has paused implementation of the proposed 15% IDC cap pending the outcome of a court hearing held on June 13. The outcome of that hearing has not been published yet, so continue to submit proposals using our current negotiated IDC rate. Like other UC campuses, UC San Diego is not drawing down funds on NSF awards that include language suggesting NSF may retroactively apply the 15% IDC cap if permitted by the court.
    • DOE (Department of Energy): A Permanent Injunction is in place that prevents the enforcement of a 15% IDC cap. Proposals should be submitted using UC San Diego’s federally negotiated rates. However, because this injunction could be lifted or stayed, UCOP advises the inclusion of disclaimer language, which is available from the Sponsored Project Office. 
  • New NIH Award Terms: A controversial civil liberties compliance clause appeared in NIH award notices, prompting UC campuses to evaluate risks. After on-again-off-again postings of this clause, it's now officially rescinded (again). There is speculation of erratic internal handling at NIH. Most UC campuses, including UC San Diego, are proceeding with accepting NIH funds but remain cautious.
  • Major NOAA Reductions: Voluntary budget reductions resulted in significant staff reductions at NOAA, including the communications staff, which affects the dissemination of timely information. Some large, public-facing programs are being quietly dismantled. Researchers are encouraged to speak with POs about the possibility of re-routing active projects into alternate funding programs.
  • Foreign Subcontract Restrictions: NIH maintains its stance against amendments involving foreign subcontracts. UC’s attempts to reroute funds through its international legal entities haven’t yet yielded viable solutions. One example of a temporary workaround involved a PI removing future foreign work to preserve funding.

F&A Reform: Proposed by the Joint Associations Group on Indirect Costs (JAG), a multi-agency working group exploring new F&A models has proposed two dramatically different structures for public comment:

  • Flat Rate Model
    • Replaces traditional indirect costs with “Essential Research Support” calculated as a fixed percentage of total budget. The proposed formulas for calculating this vary by type of institution and type of research (dry lab, wet lab, clinical, etc).
    • Simpler than current negotiated models and could benefit more complex institutions.
    • Likely to be acceptable for many campuses due to the unpredictability of negotiations
  • Direct Budget Cost Model
    • Requires institutions to build indirect costs directly into proposal budgets.
    • Includes detailed line items like human subjects oversight, animal care, utilities and space usage.
    • Operationally complex, particularly for campuses where pre- and post-award offices are decentralized.
    • Offers greater transparency and flexibility, with no federal ceiling on reimbursable costs; however, it's unlikely that institutions could actually request full reimbursement.
    • Seen as more compatible with foundation grants, offering more equitable treatment of federally and non-federally funded research.
  • The internal committee currently favors the second (direct cost) model, but negotiations and federal decisions are ongoing.
  • JAG Recommendations and Webinar videos are available here.

UC San Diego Recommendations & Requests

  • Federal Relations is working to identify terminated projects that may be of particular interest to members of the California delegation to shape ongoing advocacy. Please share high-priority terminated projects with advocacy leads (Faith Hawkins, Natalie Alpert, VC Research).
  • Faculty should continue to stay in close contact with program officers.
  • Campus leadership urges increased vigilance and proactive management of award spending, especially to avoid operating in deficit on the assumption that delayed funds will eventually arrive.
  • Regarding the Bethesda Declaration written by a group of NIH staffers – or any other advocacy letters – individuals not in leadership roles may sign advocacy open letters with their name and campus affiliation, but the institution does not officially endorse this statement, and individuals should be clear that they are not speaking on behalf of UC San Diego if they sign any such letters. 
  • Spokespeople Wanted: University Communications is seeking researchers who are comfortable going on the record about federal funding disruptions affecting UC San Diego research. We are seeking individuals who can articulate the broad impact to science, public health, the economy and innovation responsibly and effectively. Please contact the communications director in your division or school if you are interested in participating or would like to suggest someone.

When disruptions to sponsored project funding occur, campus urges units to assess the situation and take any actions as needed, in consultation with your school and VC leadership. We recognize that these award disruptions and delays are incredibly stressful to the campus as a whole and are devastating to the important work of the principal investigators (PIs) and teams that are directly impacted.

 

Due to the rapidly changing nature of ongoing federal research policy changes, we will share more regular communications on what we know and any updated guidance. Please help us continue to highlight the most salient points. If you are aware of new award disruptions, delays, stop work orders, or concerns that we haven’t addressed above or have received new information that should be shared broadly in this update, please email vcresearch@ucsd.edu.

 

Regards,

 

Office of Research and Innovation

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