"While indirect rates (the money paid for indirects as a percentage of the grant's value) average about 30 percent, many universities have ended up with indirect cost rates above 50 percent. A sudden and unexpected drop to the 15 percent applied retroactively, as planned by the Trump administration, would create serious financial problems for major research universities."
"The district court's initial ruling held that this change was legally problematic in several ways. It violated the Administrative Procedures Act by being issued without any notice or comment, and the low flat rate was found to be arbitrary and capricious, especially compared to the system it was replacing. The ruling determined that the new policy also violated existing procedures within the Department of Health and Human Services."
"But the Appeals Court panel of three judges unanimously determined that they didn't even have to consider all of those issues because Congress had already prohibited exactly this action. In 2017, the first Trump administration also attempted to set all indirect costs to the same low, flat fee, and Congress responded by attaching a rider to a budget agreement that blocked alterations to the NIH overhead policy. Congress has been renewing that rider ever since."
Indirect cost rates average about 30 percent, with many universities having rates above 50 percent. A retroactive cut to 15 percent would create serious financial problems for major research universities. The district court found the policy unlawful under the Administrative Procedure Act, calling the low flat rate arbitrary and capricious and noting violations of Department of Health and Human Services procedures. The Appeals Court unanimously held that Congress had already prohibited such a change through a budget rider first enacted after a similar 2017 attempt, and that Congress has continued to renew that prohibition.
Read at Ars Technica
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