# Understanding the Federal Grant Accountability Act

When universities conduct research funded by the federal government, they don't just use that money for the actual research itself. They also charge what's called "indirect costs"—basically overhead expenses like building maintenance, administrative staff, utilities, and other expenses needed to run the research program. Right now, universities can charge the federal government much higher indirect cost rates than they charge private companies and foundations for the same research. This bill would change that by capping how much universities can charge the government for these overhead expenses.

Specifically, the bill says that the indirect costs universities charge to federal research grants can't exceed the average indirect cost rate they charge to private research awards. In practical terms, if a university charges a private company 20 percent overhead on a research contract, they couldn't charge the federal government more than 20 percent either. The Office of Management and Budget would need to figure out what those private sector rates are at least once a year and use that as the ceiling. This could significantly reduce how much money universities receive from federal research grants, since many currently charge the government 50 percent or more in indirect costs.

The bill also requires a detailed study to compare how much the federal government and private organizations actually pay in indirect costs to universities. This study would look at which research fields get the most funding, how much of that overhead money goes to administrative staff (including diversity and inclusion positions), and whether federal agencies like the National Institutes of Health and National Science Foundation are applying their indirect cost rules consistently. The study would need to be completed within a year and include recommendations for improving how the system works.

For taxpayers, this could mean federal research dollars stretch further toward actual research instead of university overhead. For universities, it could mean significant budget cuts to administrative operations and potentially less money available for supporting research infrastructure and staff.

Federal Grant Accountability Act

Cline, Ben

<html><body>Federal Grant Accountability Act This bill limits the indirect costs that are allowable under federal research awards to institutions of higher education (IHEs). Specifically, the total amount of indirect costs allowable under a federal research award may not exceed the total amount of indirect costs allowable under private research awards. The Office of Management and Budget must determine the average indirect cost rate applicable to private research awards. Additionally, the Government Accountability Office must study and report on (1) the indirect cost rates allowable under federal research awards to IHEs, including awards made by the National Institutes of Health, the National Science Foundation, and other such organizations; and (2) the indirect cost rates allowable under private research awards to IHEs.</body></html>