In these challenging times of rapid change at the federal level, there's a clear need for reliable guidance. To support the field, AcademyHealth is launching semi-regular email updates to provide clarity and insight. These emails, expected about three times a week as needed, will cover topics like federally funded project management and policy monitoring. We aim to keep you informed and empowered amid evolving circumstances. Email content will also be available on our blog and shared via LinkedIn, X, and Bluesky. 

In today’s issue: 

  • NIH Abruptly Slashes Billions in Research Grants
  • Updates on Executive Order Implementation & Risk Exposure Management
  • Summary of Previous Legislative/Policy Updates

NIH Abruptly Slashes Billions in Research Grants

Friday evening, the National Institutes of Health (NIH) announced an immediate slashing of indirect cost awards to a maximum of 15 percent. 

Background

When awarding a research grant, the funding is divided between direct and indirect costs. Direct costs cover costs directly related to the research project being funded (e.g., research staff salaries) while indirect costs cover costs that are not directly related to the funded project but are still critical to the success of the project (e.g., maintenance and support of the research facility, legal and accounting needs, utilities like light and heat, administration and human resources, etc.). Over time this rate has averaged between 27% and 28%. These rates are negotiated per institution and are dependent on several factors including the type of research, geographical factors, the type of agreement, institution size, and others - leading to some institutions' indirect cost rates being higher. Because of this, institutions that rely more heavily on indirect costs to support research infrastructure (versus other sources of revenue) will be hit harder, disproportionately impacting universities.

Potential Impact  

The abrupt change could have immediate and disastrous effects on institutions housing federally funded projects and the research being conducted at each. This means hospitals and clinics may close, fewer practitioners will be trained for patients, roadblocks to the development of breakthroughs targeting medical priorities like childhood cancer and heart disease, and severe job losses in every state.  

Actions  

AcademyHealth is communicating with congressional leaders about the devastating implications of this change, and will keep our membership up to date. Additionally, 22 states are seeking a court order to halt the immediate implementation of this policy. 

Updates on Executive Order Implementation & Risk Exposure Management 

We're gaining insight into government interactions with contract and grant awardees concerning recent executive orders (EOs). Awardees should proactively monitor memos and notifications as they are received and take action to reduce risk.  

EOs Most Relevant to HSR

Agency Memos / Directives Reviewed 

Key Points from Memos 

  • Awardees are to immediately end (“cease and desist” or “immediately terminate”) all activities not in compliance with the EOs including removal of any non-compliant documents, materials, webpages, etc.
  • Re-naming of activities or personnel roles is strictly prohibited.
  • No additional costs associated with supporting non-compliant activities or personnel may be incurred.
  • Recipients are responsible for communicating and enforcing this direction with all subrecipients and contractors.

Potential Risk Exposure to Awardees

  • Interpretation of DEIA-promoting, gender ideology-promoting, and other key terms in the EOs is being placed on the awardee instead of the funder (i.e., the entity responsible for determining compliance)
  • Failure to comply could place the awardee at risk for termination, in-part or in-full, of their funded program/project
  • In some cases, awardees may have non-compliant activities built into contract SOWs. Termination of activities without an official modification could create a new risk of being non-compliant with contract terms.

Options for Minimizing Risk

The information below is shared for information purposes only and should not be considered legal or professional advice. We encourage you to refer to guidance from your employers and funders for direction specific to your programs and projects.

  • Be on the lookout for memos, notifications, or other formal communications from your funding agency
  • If you receive a notification directing compliance with recent EOs:
    • Review the cited EOs carefully to understand allowable vs unallowable activities and compare with your grant’s/contract’s activities and/or SOW
    • Communicate with your project officer(s) in writing to: state your intention to be in compliance, document any actions taken to align with compliance, request confirmation that you are not under a stop work or suspension of work order, request confirmation that the project officer(s) consider you to be in compliance, request additional guidance to ensure continued compliance throughout the duration of the funded program/project, request a meeting with your project officer(s) where this can be discussed in greater detail (use read receipts)
      • Save any written responses that offer guidance on what qualifies as compliant vs non-compliant activities
      • Save any written responses that confirm your compliance or provide specific guidance on what is needed to become compliant
      • If you are not able to obtain guidance / confirmation in writing, request a meeting where this can be discussed. Following the meeting, send your project officer(s) an email documenting your understanding of the discussion and ask them to confirm (use read receipts)
    • Review contract SOWs for non-compliant activities
      • If non-compliant activities are identified as part of your SOW, it will be important to secure a contract modification to bring the contract in alignment with the EOs
      • Follow the communication guidance described above for general activities, but keep the communication focused on obtaining a contract modification
      • Be sure to document requests and meeting summaries in writing (using read receipts) and save any responses
  • Do not stop work or invoicing on any activities unless you receive a formal Stop Work notice, which would reference the Federal Acquisition Regulation (FAR) or the Code of Federal Regulations (CFR)

Summary of Previous Legislative/Policy Updates

AcademyHealth continues to monitor the new administration's policy and personnel changes and assess the impact of Executive Orders and other policy changes on the field of health services research. Previous updates can be found below: 

We also rely on our members to inform us of their concerns and opportunities. If you have issues you wish to bring to our attention, please send them to advocacy@academyhealth.org.

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