A federal court has issued a nationwide temporary restraining order in response to a lawsuit filed by the Association of American Universities (AAU), the Association of Public and Land-grant Universities (APLU), the American Council on Education (ACE), and several affected institutions of higher education. The lawsuit challenges the Department of Defense’s (DoD) recently implemented policy capping indirect cost (F&A) reimbursement rates at 15% for new federal assistance awards.
Key Takeaways:
- Enforcement Suspended: The DoD may not enforce the 15% F&A cap on any new awards issued on or after June 12, 2025, until further notice.
- Nationwide Application: The restraining order applies to all institutions across all states.
- Next Court Date: A hearing is scheduled for Wednesday, July 2, at 11:00 AM EDT.
- Updates: Ongoing updates will be available on the AAU’s dedicated resource page.
Implications for USC Investigators and Research Administrators:
- Use Federally Negotiated Rates: New DoD proposals and awards are not subject to the 15% F&A cap. Investigators should continue to use USC’s federally negotiated F&A rates.
- Do Not Revise Budgets: If a DoD Program Officer requests a revised budget reflecting the 15% cap, do not submit a revised budget.
- Notify DCG Immediately: Contact your Department of Contracts and Grants (DCG) Officer right away if such a request is received. All communications with DoD on this matter must be coordinated through DCG.
The court’s restraining order suspends the implementation of the DoD policy. USC remains committed to supporting the full recovery of indirect costs as permitted under federal regulations. We will continue to provide updates as the case progresses.
Please reach out to your assigned DCG Officer if you have any questions or are contacted by a DoD agency regarding this issue.