# Federal Grant Accountability Act: What It Means

When universities conduct research funded by the federal government, they get money not just for the actual research itself, but also for the overhead costs of running that research—things like building maintenance, administrative staff, equipment, and utilities. These are called "indirect costs." Right now, universities can charge the government much higher indirect cost rates than what private companies typically pay when they fund research at those same universities. This bill would change that by capping how much universities can charge the federal 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 that private companies pay when they fund research at universities. The Office of Management and Budget would have to figure out what that private sector rate is every year and use it as the ceiling. So if private companies typically pay 25 percent overhead costs, universities couldn't charge the federal government more than 25 percent either. Currently, federal indirect cost rates at many universities run significantly higher—sometimes 50 percent or more—which means this change could substantially reduce how much money universities receive from federal research grants.

The bill also requires a detailed study to compare federal and private research funding, looking at things like which fields get the most funding, how much of the overhead money goes to administrative staff (including diversity and inclusion positions), and whether different federal agencies are applying indirect cost rules consistently. This study would help Congress understand the full picture of how research money flows through universities and whether the current system is fair to taxpayers.

For universities, this could mean less total funding for research since they'd receive smaller reimbursements for overhead costs. For taxpayers, it could mean more of their research dollars go directly toward actual scientific work rather than institutional overhead. However, universities argue that federal research requires substantial infrastructure investment, so this change could potentially slow down research capacity at academic institutions.

Federal Grant Accountability Act

Rep. Cline, Ben [R-VA-6]

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.