DoD Releases Implementation Plan for 15% Indirect Cost Cap on Higher Education Awards

The Department of Defense has issued guidance on how it will enforce the newly mandated 15% cap on indirect (F&A) costs for financial assistance awards to institutions of higher education.

For new awards, all DoD Components are directed to not allow indirect cost rates above 15% starting from the date of the memorandum’s publication (June 12, 2025). Any new award issued after this date must adhere to the cap, and funding opportunity announcements will be updated to reflect this policy.

For existing awards, the DoD instructs Components to negotiate revised indirect cost rates with IHEs where possible. While the cap does not apply retroactively, all active awards that extend beyond November 10, 2025, must comply with the 15% limit through renegotiation or reissuance.

Reminder: Principal Investigators (PIs) should promptly forward any communications or notifications they receive from the Department of Defense regarding this policy to ora@maine.edu for tracking and compliance support.