Judge Overturns NSF 15% Ceiling on Indirect Costs of Research

Federal District Court Judge Indira Talwani issued summary judgement overturning the National Science Foundation’s recently announced ceiling of 15% on the amount of indirect costs it will cover in grants.

Talwani declared the new cap “invalid, arbitrary and capricious, and contrary to law.” She ordered NSF to send within 72 hours written notice about her ruling “to all funding recipients affected by the 15% Indirect Cost Rate.”

Indirect costs are for facilities and administrative expenses that are shared among research projects and cannot be attributed to one research project. This includes use of large computer systems, equipment maintenance, operation of facilities and labs, depreciation, support staff, accounting and legal support, and so on.

Indirect cost rates for NSF grants are normally negotiated and can be above 50%, depending on the research organization (typically a university) and the nature of the research.

The lawsuit asserted “the Rate Cap Policy exceeds NSF’s statutory authority by reimposing, in more severe form, a categorical cap on indirect costs that Congress specifically eliminated in 1965 and has declined to reenact ever since.”

Other judges have blocked similar funding ceilings at the National Institutes of Health and the Department of Energy. The Department of Defense is currently subject to a temporary restraining order against its effort to impose a 15% cap last week.

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