Since overhead rates are negotiated with a separate federal entity, federal law requires NIH to follow negotiated rates. If they don’t want to, they have to justify their reasoning[1]. It’s remarkable that the reasoning they give in this notice cites rates paid to large foundations. The foundations have demanded low overhead bc the federal government has backstopped keeping the lights on. Without that backstop, the model will necessarily transition to researchers having to pay rent for lab space, electricity, supplies like compressed air, salaries for administrative assistants and the like. It’s unclear whether these things can be budgeted on a grant due to other rules. Remarkable that the administration in one go is trying to gut NIH. I would have thought that there would be more congressional resistance. More broadly, I wonder if we can look forward to more rules being published on Friday afternoons as a strategy…
It’s worth noting that negotiations of overhead rates requires extensive documentation and justification. So institutions really do have 30+% overhead expenses that have to be paid…
[1] https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/p...