Johns Hopkins, Arizona State and Cornell Universities are among a coalition of 12 higher education institutions and three trade groups that filed a lawsuit against the Department of Defense on Monday over the agency’s plan to cap universities’ indirect research cost rates at 15 percent.
While DOD secretary Pete Hegseth said in a memo last month that the policy is aimed at “accountability” and rooting out “waste,” the lawsuit argues that slashing indirect costs rates “will stop critical research in its tracks, lead to layoffs and cutbacks at universities across the country, badly undermine scientific research at United States universities, and erode our nation’s enviable status as a global leader in scientific research and innovation.”
On Tuesday, a federal judge in Boston issued a temporary restraining order, prohibiting the DOD from enacting the cap. A hearing in the case is set for July 2.
The litigation filed this week is the latest legal challenge universities and their advocates have mounted against the federal government’s attempts to cap the amount of money it gives universities for the indirect costs of conducting federally funded research. The National Institutes of Health, the National Science Foundation and the Department of Energy have all attempted to unilaterally enact similar caps, and federal judges have blocked those efforts for now.
For decades, universities have periodically negotiated with the federal government to calculate bespoke indirect cost reimbursement rates to pay for research costs that support multiple grant-funded projects, such as facilities maintenance, specialized equipment and administrative personnel. Universities factor those rates into their institutional budgets.
For example, Johns Hopkins and the DOD currently have in place a negotiated indirect cost rate of 55 percent. In 2024 JHU received $32 million from the DOD to cover indirect costs, according to the lawsuit. If the DOD’s plan moves forward, however, the university would lose $22 million.
