Today, the National Science Foundation (NSF) released a Policy Notice 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 future NSF awards. The notice indicates NSF is capping its facilities and administrative cost reimbursement at 15% MTDC for all institutions of higher education. This new policy applies to all new awards issued as of May 5. It does not apply to currently active grants. Institutions are not required to amend budgets for awards issued prior to May 5, 2025.
The announced changes will reduce the fraction of UT’s research operations expenses that the NSF will reimburse on new awards. The University covers all F&A costs related to research from its own accounts upfront. As you spend direct funds from your grant, the University bills the granting agency for those F&A costs 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 at this time.
We continue to work with the Chief Financial Officer to assess the long-term impact of this and similar policies announced by other federal agencies on UT's budget for research operations. Additional information about long-term strategies to cover the cost of research operations will be communicated to you as it is available.
We understand there are upcoming NSF proposal deadlines and that you may already be working with OSP to finalize proposal budgets. If you have an upcoming NSF proposal deadline in our UT Research Management System queue, our OSP specialists will reach out to you with specific guidance regarding F&A budgeting for proposals due within the next few weeks. If you have an NSF proposal due within the next five business days, please reach out to OSP immediately for expedited service. As we receive further clarification regarding the agency’s plans for revising proposal submission requirements, we will provide updated instruction.
