HR 420119th CongressIn Committee

Federal Grant Accountability Act

Introduced: Jan 15, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

Federal Grant Accountability Act would limit how much indirect costs (overhead) universities can claim on federal research awards. Specifically, an institution of higher education may not claim more in indirect costs for a federal award than the average indirect-cost rate applicable to private (non-federal) research awards. The bill directs the Director of the Office of Management and Budget (OMB) to determine that private-average rate at least annually and to use federal indirect-cost guidelines from 2 CFR Part 200 Subpart E when calculating indirect costs. It also requires the Comptroller General (GAO) to study and compare federal vs. private indirect-cost rates, examine how funds are used (including for admin staff and diversity, equity, and inclusion), and assess how agencies ensure consistent rate-setting. The GAO must report its findings within one year of enactment with recommendations to improve the system for determining indirect-cost rates and tracking reimbursements.

Key Points

1Indirect-cost cap on federal awards: The total indirect costs allowable under a federal research award to an institution of higher education may not exceed the total indirect costs allowable under private research awards, calculated using the average private indirect-cost rate applicable to those awards. This creates a per-award cap based on private-sector norms.
2Annual private-average rate: The Director of the Office of Management and Budget must determine, at least annually, the average indirect-cost rate for private research awards to be used for the cap.
3Use of standard guidelines: When determining indirect costs, federal guidelines in Subpart E of title 2 CFR (or successor regulations) will be used.
4GAO study and report: The Comptroller General must study (a) federal vs. private indirect-cost rates for HEI research, (b) fields funded by each sector, (c) how much indirect costs fund administrative staff (including DEI-related roles), and (d) measures agencies use to ensure consistent rate-setting. A report with recommendations is due within one year of enactment.
5Definitions: The bill defines key terms—Federal research award (any federal support for research to an institution or individual), institution of higher education (as defined by the Higher Education Act), and private research award (awards from private-sector entities).

Impact Areas

Primary group/area affected: Institutions of higher education that receive federal research awards (e.g., universities and colleges with NIH, NSF, and other federal research funding). They would potentially see reduced reimbursements for indirect costs on federal projects to align with private-average rates.Secondary group/area affected: Federal funding agencies (e.g., NIH, NSF, OMB) and the administrative framework that sets and audits indirect-cost rates, plus private funders whose award structures may serve as benchmarks.Additional impacts:- Federal budgeting and oversight processes may shift as indirect-cost reimbursements tighten.- Research administration and budgeting at universities may need to adjust to new caps, potentially affecting staffing, overhead planning, and support functions (including DEI-related administrative roles) funded by indirect costs.- The GAO’s findings could prompt changes in how indirect-cost rates are determined and tracked across federal and private programs, influencing future policy adjustments.

Generated by gpt-5-nano on Nov 18, 2025