Energy Department Announces Indirect Cost Reimbursement Cuts

In a new policy memorandum shared with Department of Energy (DOE) grant recipients at colleges and universities, DOE announced that it will limit financial support of “indirect costs” of DOE research funding to 15%. “Indirect Costs”, often referred to as facilities and administration costs, include research support costs such as depreciation on buildings, equipment and capital improvements, and operations and maintenance expenses.  

The DOE policy follows a similar effort recently launched by the National Institutes of Health (NIH), and indicates a shift in how the Trump Administration intends to administer grants across major research agencies. Major research universities, including MIT, Princeton, and Caltech, have filed a lawsuit against the Department of Energy (DOE) over a new policy capping indirect cost reimbursements at 15%. The institutions argue that this significant reduction from currently negotiated rates threatens research infrastructure and the development of early-career scientists. A similar policy by the National Institutes of Health (NIH) has already been blocked by a federal judge during ongoing litigation. 

Through its grant programs, the Department of Energy provides over $2.5 billion annually to more than 300 colleges and universities to support Department-sanctioned research. A portion of the funding goes to “indirect costs”, which include both facilities and administration costs. According to DOE data, the average rate of indirect costs incurred by grant recipients at colleges and universities is more than 30%, slightly higher than the NIH average rate of 27%.   

Following announcement of the DOE policy, Democratic Appropriators in the House and Senate sent a letter to DOE Secretary Chris Wright expressing deep concern about how the Department’s recently announced cap on indirect costs for DOE research will jeopardize critical research and innovation—and calling on him to immediately reverse the policy. Earlier this year, Senate Appropriations Chair Susan Collins (ME) expressed similar concerns about the NIH announcement to place caps on the indirect costs of biomedical research grants.  

To read the DOE Memorandum on Indirect Costs, visit: https://www.energy.gov/management/pf-2025-22-adjusting-department-energy-grant-policy-institutions-higher-education-ihe