Dear colleagues:
On Friday Feb. 7, the National Institutes of Health (NIH) released new Supplemental Guidance to the 2024 NIH Grants Policy Statement (NOT-OD-25-068) related to the charging of facilities and administrative (F&A) costs (the costs incurred to support research facilities and research operations, often referred to as indirect costs) on active and future NIH awards. The notice indicates NIH is capping its facilities and administrative cost reimbursement at 15% for all institutions of higher education. This new policy applies to all active grants as well as new grants issued as of Feb. 10, 2025. Effective immediately, the University will begin updating the F&A cost accrual for NIH-funded grant accounts accordingly. However, the announced changes will not impact your direct cost budgets for ongoing projects. You may continue to make expenditures on NIH grants as before.
The announced changes will reduce the fraction of UT’s research operations expenses that the NIH will reimburse. The University covers all F&A costs related to research from its own accounts. As you spend direct funds from your grant, the University bills the granting agency for those direct expenses and receives a partial reimbursement for the allocated F&A expenditures at the agreed rate. In other words, the F&A costs associated with your project have already been covered by the University, and any unrecovered, or unreimbursed, F&A costs will be covered by the University. We are working to understand the impact of the new policy on the budget for research support operations.
We understand there are upcoming NIH proposal deadlines and that you may already be working with OSP to finalize proposal budgets. For now, please continue to submit proposal budgets with the full federally negotiated F&A rate (59% MTDC). As we receive further clarification regarding the agency’s plans for revising proposal submission requirements, we will provide updated instruction.
