Federal Courts Block 15% Indirect Cost Caps at NSF,DOD Universities Win Legal Challenges

A federal judge has ruled against the National Science Foundation's (NSF) policy capping indirect cost reimbursements for research grants at 15%, declaring the policy invalid and unlawful. This decision favors multiple universities, including Brown, Cornell, MIT, and others, as well as higher education organizations, marking the third time this year that courts have blocked federal agencies from imposing such caps, with previous rulings against the National Institutes of Health and Department of Energy. The judge highlighted the negative impact the cap would have on research staffing, graduate positions, and university operations, emphasizing the significant pending proposals relying on negotiated indirect cost rates. Separately, the Department of Defense (DOD) also faced legal challenges for a similar 15% cap, resulting in a temporary restraining order preventing its implementation. Universities argue that these caps would severely undermine scientific research, lead to layoffs, and hinder the United States' leadership in innovation. The ongoing litigation reflects broader resistance from academic institutions against federal attempts to limit indirect cost reimbursements critical to sustaining research infrastructure.