Insights
January 21, 2026
Reimbursement practices followed by colleges and universities, private industry labs, and federal and national labs conducting federally funded research and development activities
Prepared by Attain Partners for AAU and COGR
Indirect costs are a significant component of all research projects. These necessary costs support essential research activities and typically represent approximately 25–30 percent of total project costs. For many years, the federal government has debated the appropriate level of reimbursement for these costs. More recently, beginning in February 2025, several federal agencies—including the National Institutes of Health (NIH), Department of Energy (DOE), National Science Foundation (NSF), and Department of Defense (DOD)—have proposed capping indirect cost reimbursement rates at 15 percent, a change with substantial implications for the research enterprise.
In light of these developments, the Association of American Universities (AAU) and the Council on Governmental Relations (COGR) asked Attain Partners to prepare an objective analysis explaining the indirect cost reimbursement system, including the safeguards in place to prevent fraud and abuse, and to address the following questions:
- What are the differences in indirect cost rates and recovery among research-performing entities?
- How does the federal reimbursement policy for universities compare with that for private industry?
- Are there differences in reimbursement policies between public and private universities?
Key report findings include:
- Under current federal rules, universities under-recover their actual indirect costs associated with conducting federally sponsored research and must subsidize a substantial portion of these costs.
- On average, the effective reimbursement rate for universities’ actual indirect costs is lower than that of private industry.
- Federal national laboratories—both government-owned, government-operated (GOGO) and government-owned, contractor-operated (GOCO)—receive more comprehensive reimbursement for indirect costs.
- Private industry laboratories operate with uncapped indirect cost rates and fewer restrictions; their indirect cost structures vary widely and are not directly comparable to university indirect cost rates.
- Differences in indirect cost rates between public and private universities are not driven by differing federal rules or negotiation processes, but rather by four primary structural factors: the types of research; the location of the schools; the cost subsidy provided by the states; and the volume of research.
The findings and detailed analysis are presented in the Indirect Cost Rates and Recovery Report, which was prepared by Attain Partners for Association of American Universities (AAU) and the Council on Governmental Relations (COGR). AAU and COGR have decided to make the report publicly available.
Fill out the form to download the report.
2026-01 RES: AAU/COGR Report Downloads
Indirect Cost Rate Policy Updates and Guidance
With decades of experience in the research ecosystem, Attain Partners is ready to help your institution navigate these changes.
