UPDATE: A number of lawsuits against the NIH F&A rate cap have been filed, and we learned this afternoon that a Massachusetts judge has issued a Temporary Restraining Order, applicable to all states which had filed lawsuits, including California. Guidance in the email below remains the same. We will continue to track and communicate information as this issue evolves.
Dear Colleagues,
On Friday, February 7th, the National Institutes of Health announced a new cap on Facilities and Administration cost recovery (also known as Indirect Cost recovery, or IDC) of 15%. As this situation evolves, we want to offer information about F&A costs and guidance as PIs prepare NIH grant proposals. Please see the FAQs below for information; we will post these online and update them as more information becomes available.
Most importantly at this time: if you are a PI or Fund Manager preparing an NIH proposal for submission this week, contact your SPO officer for guidance about budget preparation.
If you are a PI or Fund Manager preparing an NIH proposal for submission after February 15th, continue to prepare your proposal, and wait for additional guidance about budget construction.
FAQs
What are Facilities and Administration Costs (also known as IDC)?
Facilities and Administration costs – also known as IDC – is a reimbursement for research-related costs incurred by an institution.
F&A are negotiated by each university with the federal government, following a detailed audit of actual expenses.
F&A consists of:
Administrative Costs (capped at 26%), which include personnel and systems which support grant management, safety, and other activities central to the research ecosystem.
Facilities Costs (negotiated per campus), which include utilities, maintenance, equipment, and other research-related costs.
UCSD’s current F&A rate is 59%, far below the actual cost incurred when conducting research.
F&A recovery is not applied to all direct costs, and some grants (e.g., training grants, 8%-12%) have lower rates.
What changed with F&A rates?
On Friday, Feb. 7, the NIH issued a notice limiting F&A to 15% of all active and future awards.
We are assessing the financial impact and developing response strategies.
Does this apply to only NIH grants, contracts, and cooperative agreements?
It is not yet clear, although many organizations think this applies to only grants - not contracts or cooperative agreements.
I have an upcoming NIH Grant Proposal, what should I do?
If you are a PI or Fund Manager preparing an NIH proposal for submission this week, contact your SPO officer for guidance about budget preparation.
If you are a PI or Fund Manager preparing an NIH proposal for submission after February 15th, continue to prepare your proposal, and wait for additional guidance about budget construction.
How is this going to impact NIH awards?
We are continuing to assess the impact of a 15% F&A rate on NIH awards, and will stay in communication with PIs and Fund Managers as we learn more.
How will the 15% IDC rate on awards affect the draw down of expenses from NIH?
The NIH’s February 7, 2025, supplemental guidance states: “This policy shall be applied to all current grants for go forward expenses from February 10, 2025, forward as well as for all new grants issued.” For expenses incurred before February 10, 2025, they can be submitted with your negotiated indirect cost rate. For expenses incurred on or after February 10, 2025, we recommend that campuses temporarily wait to draw down expenses pending further guidance. (Source: UCOP)
Please feel free to share this information with others at UC San Diego.
Best,
Cori
Corinne Peek-Asa, PhD
Vice Chancellor for Research and Innovation
UC San Diego