The National Science Foundation (NSF) has begun issuing award terms referencing a 15% indirect cost rate, citing Case No. 1:25-cv-11231 and NSF Policy Notice 25-034. USC has received such terms, which have appeared not only in new NSF awards but also in amendments, continuations, and supplements to existing awards—despite NSF’s own policy guidance and a federal court order prohibiting retroactive application.
NSF Policy Notice 25-034 explicitly states that the 15% cap is not to be applied retroactively to existing awards. Furthermore, the U.S. District Court for the District of Massachusetts has issued a temporary stay on implementation of the policy, pending legal review. While the notice indicates that NSF may, if the courts permit, apply the cap retroactively by unilaterally modifying award terms, it also affirms that the rate may not be reduced below 15%.
USC Investigators should continue to apply USC’s federally negotiated indirect cost rate unless formally instructed otherwise.
DCG will continue to monitor developments and provide updates as additional guidance becomes available.