Department of Energy caps indirect cost rate at 15 percent for universities
The action is projected to generate more than $405 million in annual cost savings.
The Department of Energy (DOE) announced on Friday a new policy action aimed at halting what it characterized as “inefficient spending by colleges and universities while continuing to expand American innovation and scientific research.”
In a new policy memorandum shared with grant recipients at colleges and universities, DOE announced that it will limit financial support of “indirect costs” of DOE research funding to 15 percent. This action is projected to generate more than $405 million in annual cost savings.
“The purpose of Department of Energy funding to colleges and universities is to support scientific research – not foot the bill for administrative costs and facility upgrades,” U.S. Secretary of Energy Chris Wright said. “With President Trump’s leadership, we are ensuring every dollar of taxpayer funding is being used efficiently to support research and innovation – saving millions for the American people.”
Through its grant programs, the Department provides more than $2.5 billion annually to more than 300 colleges and universities to support Department-sanctioned research. A portion of the funding goes to “indirect costs,” which include both facilities and administration costs.
According to DOE data, the average rate of indirect costs incurred by grant recipients at colleges and universities is more than 30 percent, a significantly higher rate than other for profit, non-profit, and state and local government grant awardees. The DOE announcement noted that limiting these costs to a standard rate of 15 percent will help improve efficiency, reduce costs, and ensure proper stewardship of American taxpayer dollars.
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