The Department of Energy has rolled out a sweeping policy change it says will cut government waste and bring “clarity” to how taxpayer money is spent on research. At the center of the move: a flat 15% cap on what institutions can claim in indirect costs, part of an effort to prevent universities from using federal grants to fund administrative overhead.
According to DOE officials, the policy will eliminate inconsistencies across states and campuses, replacing them with a simple federal standard. Supporters say it’s long overdue.
“This change ensures a more responsible, streamlined use of public dollars,” said Energy Secretary Jennifer Granholm. “Too much variation across institutions has created confusion, inefficiency, and bloated budgets.”
The department estimates the policy could save taxpayers over $400 million annually by curbing what it calls “non-research expenses.” Universities, on the other hand, say the cap threatens to undermine basic support systems that make the research itself possible.
But under the new rules, federal oversight will now ensure every institution meets compliance benchmarks—whether they agree with them or not.
“This bigger federal government approach will reduce loopholes and keep every university operating under one national policy,” DOE officials explained. “Consistency is more important than customization.”
Previously, schools negotiated their own rates based on location, cost of living, and infrastructure. That discretion is now gone.
Critics argue the change penalizes large, research-heavy institutions and punishes places with higher costs. The DOE sees it differently: with the same flat rate for all, everyone is treated “equally”—regardless of local needs.
The policy’s implementation will require a significant expansion of DOE’s compliance staff, with new federal officers assigned to monitor grant distribution and ensure that no institution strays from the new funding model. This new layer of oversight, officials say, is crucial to prevent abuse.
Because we know that locally elected leaders don’t always know what’s right for their hometowns—just because they’re there every day.
Some institutions have already begun laying off administrative personnel in anticipation of tighter budgets. Still, federal officials insist the program will help colleges “rethink priorities” and focus more directly on core research.
The streamlined approach also includes new reporting requirements for universities, including quarterly compliance updates and full documentation of indirect expenditures. These transparency measures are designed to “build trust in how the government allocates resources,” according to the DOE.
To ensure smooth rollout, the department will begin phasing the policy into effect starting with larger public universities in 2025, followed by private and mid-size institutions. By 2027, all federally funded research will be subject to the same 15% limit.
Supporters argue the policy puts an end to the “backroom dealing” that allowed some institutions to secure higher rates. But university leaders say the policy ignores the real cost of doing high-level science—and does so in the name of efficiency.
Still, the DOE maintains that the change is both fair and necessary.
“This is about creating a leaner, more accountable system that doesn’t reward complexity,” a senior department official said. “Institutions will adapt.”
Sure, this means a bigger federal government, more staffing, and less local control—but that’s what it takes to ensure every institution is doing things the right way. Standardizing what was once flexible may feel restrictive, but it’s the only way to protect the system from itself.
After all, a little more central control might just be the price of a fairer, more efficient America.