The U.S. Department of Energy (DOE) published three new Policy Flashes related to indirect rates for grants and cooperative agreements on May 8, 2025. The Policy Flashes – which apply to 1) nonprofits, 2) for-profits and 3) state and local governments – establish a new policy of limiting the indirect rate for recipients of DOE funding as follows:
- Nonprofits – 15 percent
- For-profits – 15 percent
- State and local governments – 10 percent
Importantly, the Policy Flashes only apply to new or conditional awards. In other words, they should not impact recipients under fully negotiated awards.
These three new Policy Flashes are in addition to a previous Policy Flash issued on April 11, 2025, which was applicable to new awards to Institutions of Higher Education (IHEs) (the IHE Policy Flash). The IHE Policy Flash limits indirect rates in new awards to IHEs to 15 percent and notes that DOE will undertake actions to terminate all grants awarded to IHEs that do not conform with the updated policy. Notably, the language regarding termination of existing grants that do not conform with the new policy is not present in the three new Policy Flashes applicable to nonprofits, for-profits and state and local governments.
IHEs immediately challenged the IHE Policy Flash in Massachusetts federal district court, and within days, the district court granted a temporary restraining order blocking enforcement of the IHE Policy Flash. That relief is still in effect while the parties await the district court's decision on a pending request for a preliminary injunction.
It is anticipated that the three Policy Flashes published on May 8 will be similarly challenged in federal district court, and Holland & Knight will provide further updates as they become available.
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