Message from Provost and COO: Update on National Institutes of Health (NIH) F&A Funding Cap

Dear colleagues,

Last Friday evening, the National Institutes of Health (NIH) released supplemental guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates establishing a new cap of 15% on facilities and administrative (F&A) costs.

The F&A (indirect cost) rate is negotiated periodically with the federal government based on analysis of our actual costs incurred in supporting extramurally funded research. A rate of 15% is substantially lower than the previously negotiated rate, and university leadership is in the process of assessing the potential impact of this change, which would be significant, particularly if other federal agencies follow suit. Late Monday, a federal district court judge temporarily blocked the action in 22 states which was expanded to all 50 states earlier this morning.

As President Sands shared with the campus community yesterday, we are actively engaged in informing Congressional leaders, Virginia Tech Board of Visitors members, and others in leadership positions about the potential negative consequences if the proposed actions move forward.

As this issue works its way through the legal system and, possibly congressional consideration, and until further notice, Virginia Tech will continue to submit proposals at the previously negotiated rate. Regardless of the outcome, principal investigators do not need to change rates on projects; the Office of Sponsored Programs will adjust F&A rates if necessary.

Considering that other federal agencies may also reduce F&A costs, we encourage principal investigators (PIs) in the interim to limit expenditures funded by returned overhead until we have a better understanding of how best to manage this challenging situation. In regard to graduate research assistants funded on returned overhead, we encourage PIs to explore the feasibility of shifting funding of stipends to another source.

This situation is evolving quickly and we will continue to update you as new information becomes available. If you have questions or comments, please send them to Provost Communications. Updates specific to federally sponsored grants and contracts can be found on the Research and Innovation website.

Cyril Clarke, Executive Vice President and Provost
Amy Sebring, Executive Vice President and Chief Operating Officer