NIH Notice Related to Indirect Costs

Dear Colleagues,

NIH issued NOT-OD-25-068 Friday evening (2/7/25). The NIH notice reduces the Indirect Cost (F&A Cost) Rate that NIH will pay to 15%, effective Monday, 2/10/25.  The described rate reduction applies to both new and existing NIH awards.  MSU’s currently negotiated research F&A rate is 57% of Modified Total Direct Costs (MTDC).  The significant reduction in the F&A rate will impact the University’s reimbursement for costs incurred to support research.  These include laboratory facilities, compliance and regulatory support, IT and high-performance computing resources, and other aspects of infrastructure support.  As President Guskiewicz shared in his 2/10/25 communication, 22 state attorneys general, including Michigan, have filed for a preliminary injunction.  As of the evening of 2/10/25, the Court has blocked this reduction, pending a future hearing.  While this process plays out, please proceed with the following:

• Proposal submissions.  MSU has not agreed to waive F&A on NIH awards.  Until such time as we receive further guidance from university leadership, all proposals must be submitted in accordance with  MSU’s negotiated (full) F&A rates.  NIH Proposals may NOT be submitted at 15%.  (Non-standard proposals such as fellowship grants can continue to be submitted in accordance with previously existing guidance.)
• New awards.  The Office of Sponsored Programs has not been authorized to accept NIH awards at 15%.  If we receive new awards that reference the 15% F&A rate, such awards will be held until this issue is resolved.  The same is true of any NIH flow-through awards we receive from other institutions that reference the 15% rate.
• Expenditures on new awards.  PIs are not authorized to spend against any new awards or modifications that reference the 15% rate.  That means no Advance accounts will be set up for awards or modifications that include the 15% and no costs should be incurred on non-sponsored program MSU accounts in support of the grant work.  Please also note that PIs are not authorized to spend against another sponsored account for work on a project that is in a hold status while waiting for this issue to be resolved.   “Parking” costs on one grant while waiting for another grant to be received is unallowable.  Reassigning personnel to work on projects that are funded, subject to terms of the award, or to non-sponsored sources, generally, would be allowable.
• Rebudgeting existing awards.  Please do not plan for re-budgeting costs from indirect to direct in anticipation of an F&A rate reduction.  Costs will continue to be incurred at our negotiated (full) F&A rate until further notice.
• No-cost extensions.  We have learned that the automatic NCE link in eRA Commons has been deactivated.  We have not yet received any official communication from NIH regarding this change.  It appears that NIH may no longer allow MSU to approve a one-time, no-cost extension at the end of the project’s original period of performance.  PIs should not assume that no-cost extension requests will be approved.  
• Reimbursement.  Contract and Grant Administration has not been authorized to draw down funds/request reimbursement of costs from NIH at the 15% rate.  Reimbursement for NIH grants will be delayed.

This guidance may change frequently in the coming days and weeks as we learn more.  We will continue to provide updated information through:  Federal Updates Resulting From Administration Transition.   If you have questions on a specific project(s), please email your OSP/CGA contact.  Thank you for your continued efforts.

Twila Fisher Reighley
Assoc. VP for research
Sponsored Programs Administration
Michigan State University reighley@msu.edu