Report on Research Compliance 22, no. 3 (March, 2025)
If NIH succeeds in imposing an across-the-board indirect cost rate of 15%, rough estimates indicate the University of Michigan could lose $119 million a year. Emory University could be down $75 million. For the University of Washington, the cap could mean an annual decline of $86 million.
Courts have issued temporary restraining orders (TROs) stopping NIH from imposing this policy, which was announced on a Friday after 6 p.m. But it is just one of the changes in funding amounts and policies instituted by the Trump administration in its very early days that have left some research compliance officials, investigators and institutional leaders flummoxed and fearful.
“I’m waking up in the middle of the night having panic attacks,” said one who spoke to RRC on the condition of anonymity, adding that recent weeks have been “mentally torturous.”
The research community has also been rattled by mass firings at granting agencies, following a funding freeze ordered by the Office of Management and Budget (OMB) and later rescinded after a successful lawsuit. Despite TROs, widespread disruptions in payments for ongoing and new awards continue. Other challenges include trying to interpret the various executive orders being issued daily, including those associated with diversity, equity and inclusion (DEI) or DEI programs that encompass accessibility (DEIA)—prioritized by the Biden administration but many now considered a form of illegal discrimination by President Donald Trump.
“I would say that, as a research administrator, I read things very carefully to understand what they mean and that many of the things that are coming out, whether it’s the wording of the executive orders or the notice about the indirect costs, do not make any sense when you actually read them,” one told RRC. “They are very confusing, even if it weren’t for the pace of changes and the number of reversals.”
The administration is seeking to significantly reduce the size of the federal workforce. In addition to a hiring freeze, some 75,000 workers accepted the government’s “deferred resignation” offer. OMB also ordered agencies to fire all probationary employees, with some case-by-case exceptions, which may result in the loss of perhaps 200,000 workers. High-level officials are being let go or leaving. Michael Lauer, NIH deputy director for extramural research, and Larry Tabak, principal deputy director, announced retirements within two days of each other; Tabak’s email reportedly was sent at 10 p.m. on Feb. 12 and was effective immediately.
Following the swearing in of new HHS Secretary Robert F. Kennedy Jr. on Feb. 13, President Trump signed an executive order creating the President’s Make America Healthy Again Commission, whose goals include prioritizing research on the causes of chronic diseases.[1]
Below is an overview of several major developments, including the indirect cost rate reduction, executive orders on DEIA; the practical impact of staffing reductions; and strategies for not burning out. A story on the associated legal bases for award terminations appears elsewhere in this issue.[2]
RRC also spoke with a research administrator about life amid the changes.[3] RRC will continue to report on the new administration and its impact on research in future issues.
UNC Stands by Its NICRA
Among all the recent changes rocking the research community, the indirect cost rate cap grabbed the most headlines and perhaps the swiftest restraining order, albeit temporary. On Feb. 7 (a Friday) after 6 p.m. ET, NIH posted a notice stating that “there will be a standard indirect rate of 15% across all NIH grants for indirect costs in lieu of a separately negotiated rate for indirect costs in every grant.”[4]
The following Monday—on the day it was scheduled to go into effect—a Massachusetts judge issued a nationwide TRO and scheduled an in-person hearing for 10 a.m. on Feb. 21. Many institutions have a negotiated indirect cost rate agreement (NICRA) allowing a rate of 50% or more; some are as high as 69%. These are hammered out every couple of years and must be applied.
For now, while the cut is still under legal challenge, experts advise that institutions stay the course and refrain from voluntarily reducing the NICRA they include in applications and that they pay to subawardees.
The University of North Carolina (UNC) at Chapel Hill is doing just that—standing by its NICRA.
As of Feb. 10, it requires the following language to be included in the budget justification of all NIH proposals:
“The University submits this proposal in compliance with federal law and the status of court actions as of the date of submission. Indirect costs are calculated based on the most recent federally negotiated Facilities and Administrative (F&A) rate agreement for UNC Chapel Hill, dated September 16, 2021. This calculation complies with the program announcement and the NIH Grants Policy Statement in effect as of the date of submission. The University will continue to follow applicable law and any official guidance in effect at the time of future submissions.”[5]
According to a detailed analysis by The New York Times, which described its estimates as “conservative,” UNC had 1,001 NIH grants in fiscal year 2024 worth $480 million. A 15% indirect cost rate last year would have cost it $72 million.[6]
The Times noted that the reduction “would have far-reaching effects, not just for elite universities and the coastal states where many are located.” It calculated that the top 10 NIH recipients among colleges, universities and medical schools would have received $1.163 billion less with a 15% cap than if their NICRAs were honored.
Suits challenging the indirect cost rate cap noted that Congress specifically prohibited NIH from changing the indirect cost rate program beginning in 2018. If NIH does not prevail in court, it could withdraw the notice and revise it to something that would withstand legal scrutiny.
Government responses were due by the end of February in another case seeking a permanent restraining order prohibiting OMB from halting federal funds that first were frozen by an OMB memo issued Jan. 27 ordering a halt to some spending—estimated in trillions of dollars—pending a review. “The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” OMB said at the time.[7]
Although it rescinded the memo two days later, a judge in Rhode Island issued a TRO and most recently found that funds were still frozen.
When Do DEI Programs ‘Discriminate?’
The myriad executive orders and their practical application are adding to confusion and concern. In particular, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” specifically prohibits DEI activities that “constitute illegal discrimination or preferences.”[8]
Moreover, it also orders federal agencies to “identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”
On a practical level, according to a former vice president for research at a major university who requested anonymity, initiatives to make clinical trials “more inclusive, trying to broaden the net of the people whom we recruit either as employees or as officials, as institutional review board [IRB] members” or as members of institutional animal care and use committees are simply steps taken to reflect the diversity of America and the global community. They are not illegal under any civil rights laws that “we have lived under since President Johnson first signed them in 1964 and 1965,” the former vice president said.
DEI programs that could violate a civil rights law are “exclusionary rather than inclusionary…. things like quotas, like stipulations, that a particular position must be occupied by a person of a particular gender identification, gender, sex, demographic by race, ethnicity,” the former vice president said. An initiative that is “exclusionary in its intent and in its articulation could be construed as illegal,” the individual added. As such, it is essential to “pay attention” to these nuances and wording.
“Importantly, those temporary restraining orders limit the effectiveness of the executive orders issued by the president, but they do not limit agency-level discretion on particular grants and grant programs,” the former vice president said.
In the absence of clear direction, Scott Sheffler, a partner with Feldesman Tucker Leifer Fidell LLP, suggested a high-level framework regarding the DEIA executive orders.
“The mantra that I would recommend as we all work to build out a more fulsome understanding is to look at those executive orders and the various guidance that will come out on those executive orders as essentially saying, ‘Look, your decision-making should be colorblind and sex neutral,” Sheffler said during a Feb. 4 webinar. “And if that’s 80% of your thought process, with the 20% getting then into the details of what that looks like in implementation, you’ll probably find the right balance.”
‘Please Confirm You Are Still There’
When payment systems stop working—as they have repeatedly over the last months—research administrators don’t know why and are reaching out to help desks and their agency contacts, who they also need to simply process their awards.
And while the departures of Lauer and Tabak played out in public, it will be more difficult to know about others, such as program officers and lower-level staffers who perform the important minutiae of paying out and managing funding for awardee institutions and their investigators. Whether they lose their jobs or retire, the only sign they’re gone might be that their name is no longer in the voicemail message or the office phone simply isn’t answered.
“Grants are going to fall into a black hole because there won’t be people to reassign to them once someone is gone,” lamented one grants administrator who requested anonymity. For example, an NIH official told this individual that a new grant would be released just as soon as a revised “other support” report was received, which was due Feb. 14. Aware of layoffs, the administrator wrote in an email with the report, “Please confirm that you are still there, and you’ve received this email.”
There was no response.
The personnel drain may engulf agencies vital to the protection of both science and research participants, including the Office of Research Integrity, which enforces the HHS misconduct regulation, and the Office for Human Research Protections, whose purview is compliance with human subject regulations. Significant layoffs are reportedly also occurring at the National Science Foundation, among others.
“The work of these agencies will go on, but many of the positions will be staffed by people who are being promoted into the positions and who don’t know as much as the people who are leaving,” the former vice president said.
Staff vacancies and turnover, combined with changes in priorities and policy positions, also will mean “at least a partial paralysis of decision-making in these organizations,” the former vice president said. Answers to questions about a controversial grant, or “approval to a change in the aim of a study that’s already been funded but is in the middle of its course,” may take much longer than usual.
A Marathon, Not a Sprint
“It won’t be a one-or-two-week turnaround in the way that it’s often been in the past. It’s going to slow our operations and make things a lot more uncertain as we try to figure out what we need to do as researchers, as IRB members, as research administrators.”
Speaking broadly, Sheffler recommended taking the long view while bracing for more changes to come.
“This is a marathon, not a sprint,” Sheffler said. “There has been a tremendous amount of new information that’s been issued…the executive orders, the OMB memo…and they all interact with the grantee community. Some in the grantee community are filing lawsuits, getting TROs; everything feels like it’s changing by the minute. This will slow down, but it won’t stop.”
The policy differences between the Biden and Trump administrations are “significant,” he noted.
“One thing that’s clear is that the new administration intends to aggressively implement these revised policies. We’ve got six months of learning how to look at systems differently. So, don’t get worn out in the first couple of weeks,” Sheffler said.
1 Theresa Defino, “’Healthy Again’ Panel Seeks to Shift Research Focus,” Report on Research Compliance 22, no. 3 (March 2025).
2 Theresa Defino, “UG Permits Award Termination When Agency Policy Goals Change,” Report on Research Compliance 22, no. 3 (March 2025).
3 Theresa Defino, “I’ll Probably Lose My Job,” Report on Research Compliance 22, no. 3 (March 2025).
4 Theresa Defino, “Judge Sets Hearing for Feb. 21 on NIH Indirect Cost Rate Reduction; Orders Updates to Ensure TRO is Honored,” RRC E-Alerts: February 13, 2025.
5 The University of North Carolina at Chapel Hill, Office of Sponsored Programs, “Updated Language for NIH Budget Justifications,” February 12, 2025, https://unc.live/4bkfKaB.
6 Emily Badger et al., “How Trump’s Medical Research Cuts Would Hit Colleges and Hospitals in Every State,” The New York Times, February 13, 2025, https://bit.ly/42WNtVa.
7 Executive Office of the President, Office of Management and Budget, “Memorandum for Heads of Executive Departments and Agencies,” January 27, 2025, https://bit.ly/3EJAHiV.
8 The White House, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” executive order, January 21, 2025, https://bit.ly/4hAi4fI.
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