Sent to all federal PIs, research associate deans, other academic leaders, and central and departmental research administrators.
Dear Research Colleagues,
On Friday, April 11, the Department of Energy (DOE) released a Policy Flash (2025-22) that instructs DOE contracting offices and grants offices to implement a 15% F&A rate for institutions of higher education. The memo stated that the DOE will no longer use a University's federally negotiated indirect cost rate and will instead use a standardized 15% indirect cost rate. DOE has said that they intend to terminate all existing awards that do not use the 15% rate, but that recipients will receive separate notice and guidance. On the morning of Tuesday, April 15, we received a notification from DOE conditionally terminating 39 of our awards if we do not accept the new 15% rate.
On Monday, April 14, a legal challenge contesting this F&A reduction was filed jointly by the American Association of Universities, the American Council on Education, and the Association of Public and Land-Grant Universities, along with several impacted research universities. On Wednesday, April 16, the US District Court of Massachusetts issued a temporary restraining order that prevents the DOE from implementing the changes in the Policy Flash. The DOE cannot terminate awards for using a rate other than 15%, nor modify indirect cost rates at this time.
Our guidance for PIs and research staff at this time is as follows:
- Until further notice, you may continue spending on existing awards using the F&A rate shown on your Notice of Grant Award and approved budget. For on-campus research projects, this is likely 54% MTDC or 55% MTDC, depending on when your new or renewal award was received. The University will not be adjusting the F&A rate on these awards at this time. We will communicate additional guidance as soon as further clarification is received.
- If a termination notice is received within the coming days or weeks from DOE or anyone other than SPA, immediately send it to your SPA Grant and Contract Office and copy April Coon ([email protected]) and David Hagen ([email protected]). Further guidance will be forthcoming on how these will be handled.
- For proposals that need to be submitted immediately, continue to budget normally using our federally negotiated rates. Please delay submission of proposals that do not have short-term, defined due dates at this time.
- Temporarily, SPA will not be accepting any requests to set up pre-award spending on DOE awards. Please note that the University has not yet made any decision about whether or not it will accept DOE awards at a 15% rate; therefore, the risk of unnecessary use of non-sponsored funding to cover costs incurred is very high. If an unusual situation exists that you believe would warrant an exception, contact David Hagen to discuss prior to submitting the request. As always, University policy prohibits incurring costs on one sponsored project with the expectation that the costs will be moved onto the correct project at a later time.
- This guidance applies regardless of whether we are the prime recipient of DOE funding or whether we are a subrecipient of funding. Remember that this policy flash only applies to recipients who are institutions of higher education, so some recipients or subrecipients may not be impacted. If we are the primary recipient and are issuing a subaward to another institution of higher education from our own award, we will honor whatever action our subrecipient wishes to take. Although it is unlikely, if a subrecipient voluntarily asks to reduce its F&A rate to 15%, then we will honor that request. However, we will not restore funding to the subrecipient at their negotiated rate in the event the courts impose a temporary restraining order or a preliminary injunction. For that reason, we encourage subrecipients to be cautious about voluntarily agreeing to a reduced rate.
For questions, contact David Hagen at [email protected].
Please continue to visit our SPA Federal Executive Orders and Other Policy Directives website for the most up-to-date guidance.
Sincerely,
April Coon, Director, Sponsored Projects Administration
David Hagen, Director, Office of Cost Analysis