The federal agency implemented a policy capping indirect cost rates at 15 percent for new grants awarded to universities.
A federal judge on Friday vacated the National Science Foundation’s (NSF) new policy that capped indirect cost rates on research grants awarded to universities.
The decision followed a lawsuit filed last month by the Association of American Universities and several institutions, challenging the NSF’s move to cap indirect cost rates at 15 percent for new grants and cooperative agreements awarded to universities.
Typically, the institutions negotiate these rates with the NSF and other agencies, according to the court filing.
The NSF is an independent federal agency that supports science and engineering fields by issuing research grants. Its investments make up about 25 percent of the federal funding U.S. colleges and universities receive for basic research, according to its website.
The NSF said the rate cap policy was intended “to streamline funding practices, increase transparency, and ensure that more resources are directed toward direct scientific and engineering research activities.”
“This policy allows NSF and its awardees to focus more on scientific progress and less on administrative overhead by aligning with common federal benchmarks,” the agency stated in a May 2 policy notice.
District Judge Indira Talwani ruled on June 20 that the policy is arbitrary, capricious, and “contrary to law.” In a 52-page memorandum order, Talwani said that the NSF failed to explain how the cap will help it achieve efficiency in the grant award process.
Talwani stated that the plaintiffs have shown the rate cap policy would cause harm, including disruptions to ongoing research projects and potential layoffs of specialized researchers and staff.
“Although the 15% indirect cost rate does not affect existing or continuing grant awards, plaintiffs and member institutions collectively have thousands of proposals pending before NSF, which they submitted in reliance on their negotiated indirect cost rates,” the judge stated.
“And plaintiffs’ declarations establish that many proposed research projects and future projects cannot proceed as budgeted with indirect costs funded at a 15% rate.”
The Epoch Times has sought comment from both the NSF and the Association of American Universities but did not receive a response by publication time.
