SST Committee Leaders Request GAO Review of Indirect Costs for Federal Research Awards

(Washington, D.C.) - Today, House Science, Space, and Technology Committee Chairman Brian Babin, Research and Technology Subcommittee Chairman Jay Obernolte, and Investigations and Oversight Subcommittee Chairman Rich McCormick sent a letter to Government Accountability Office (GAO) Comptroller Gene Dodaro requesting a comprehensive review of the indirect costs of conducting federally supported research.

"Since the 1940s, the federal government has debated, implemented, removed, or revised many actions related to indirect costs," Babin, Obernolte, and McCormick wrote in the letter. "Despite the ever-active debate, there continues to be a lack of transparency in the current indirect cost model, which leads to concerns around how taxpayer funds are spent."

Earlier this year, the National Institutes of Health (NIH) announced its decision to implement a standard indirect cost rate of 15 percent for all grants awarded to institutions of higher education (IHEs), replacing the decades-old system of individually negotiated rates. This change will apply to all future grants and new expenditures under existing grants. Additionally, the proposed rate of 15 percent would be consistent with rates that private foundations charge. NIH stated that by implementing this lower rate, its goal is to maximize funding allocated to direct scientific research costs rather than administrative overhead.

Following NIH's announcement, several other federal science agencies, including the Department of Energy, the National Science Foundation (NSF), and the Department of Defense, have enacted similar policies.

In light of these recent changes, the Chairmen expressed their apprehension about indirect costs in their letter, drawing from insights gained during prior examinations.

"In 2013, GAO found that indirect cost reimbursements from NIH to universities had increased slightly faster than those for direct costs and recommended that NIH assess the impact of growth in indirect costs on its mission," Babin, Obernolte, and McCormick said. "Additionally, in 2017, GAO found that indirect cost rates for NSF had generally increased since 2010. GAO also reported that NSF had not consistently implemented its indirect cost rate guidance and recommended that NSF take steps to improve its guidance and implement it consistently."

To address these concerns effectively, the Chairmen are requesting that GAO conduct a thorough review of the indirect costs associated with federal grants to assess the financial implications and ensure transparency in the expenditure process. Additionally, they have outlined several questions in their letter to facilitate a deeper understanding of these changes and their anticipated impact.

Read the full letter here.

Permalink: https://republicans-science.house.gov/2025/6/sst-committee-leaders-request-gao-review-of-indirect-costs-for-federal-research-awards