Page updated Feb. 16, 2026: Updated section on federal government shutdown and section on research reimbursement rates
We remain highly concerned and are closely monitoring potential changes to how federal grants may be awarded, administered, amended and/or discontinued.
Partial federal government shutdown
Funding for the Department of Homeland Security ended on Feb. 13, 2026, resulting in nonessential programs in that department shutting down until an appropriations bill is passed and signed into law. Since all other federal departments have been funded through Sept. 30, the shut down is expected to have limited effects on the University.
Research reimbursement rates
Appropriations bills enacted for FY2026, which ends Sept. 30, 2026, contained provisions blocking unilateral changes to indirect research cost reimbursement rates. These provisions are a response to various attempts by the administration to impose 15% caps on reimbursements of the Facilities and Administration (F&A) costs through which universities, hospitals and research centers recover expenses incurred while conducting federally sponsored research on behalf of the American people.
The bills’ language also encourages the administration to pursue the Financial Accountability in Research (FAIR) model that has been proposed by several national associations.The UW has been an active participant in the development of the FAIR model.
Previous updates
On Feb. 7, 2025, the National Institutes of Health (NIH) announced a 15% cap on “indirect costs,” which are the Facilities and Administration (F&A) costs through which universities, hospitals and research centers recover expenses incurred while conducting research. These costs can be complex to calculate and include lab infrastructure, utilities, communications platforms, IT support, building maintenance, HR and payroll services, compliance officers, reporting officers and purchasing departments, among other necessities that are vital to conducting research.
We partnered with the Washington Attorney General’s Office to support the lawsuit filed Feb. 10, 2025, in the U.S. District Court for Massachusetts. That same day, a federal judge issued a temporary restraining order on the implementation of this proposed cap. On March 6, 2025, the judge extended the prohibition on implementing that cap by issuing a preliminary injunction, which blocks implementation while the lawsuit is in process, and in April 2025 permanently barred the rate change. On Jan. 5, 2026, a unanimous ruling by a three-judge panel of the U.S. Court of Appeals for the First Circuit upheld the lower court’s ruling.
An April 11, 2025, action by the Department of Energy to lower its rate to 15% was also challenged and temporarily blocked by a federal judge. That judge on June 30, 2025, issued a final judgement blocking that rate change. On January 27, 2026, the department announced that its policy attempting to lower the rate was no longer in effect due to language in the FY26 appropriations bill for the Department of Energy.
On May 2, 2025, the National Science Foundation announced it is implementing a 15% cap on indirect cost reimbursements for new awards, a policy which is the subject of a lawsuit filed May 5, 2025. The government subsequently agreed to stay implementation of that 15% cap until a June 13, 2025, hearing, and on June 20, 2025, a federal judge ruled the policy was “arbitrary and capricious” and struck it down. On Sept. 26, 2025, the administration filed a motion to dismiss its appeal, which the plaintiffs are not opposing and which, if approved by the court, would mean the judge’s ruling would stand.
The Department of Defense on June 12, 2025, released details of its plan to implement a 15% cap. This action is being challenged in court by a group of associations and universities, including the UW. It was temporarily blocked by a federal judge with that being extended into a preliminary injunction on July 18, 2025, which only applies to parties to the lawsuit. On Dec. 9, 2025, the federal government appealed that injunction, however on Feb. 10, 2026, it moved to drop its appeal of that ruling in light of language in the FY2026 appropriations bill for the department.
NIH restrictions on fetal tissue research
On Jan. 22, 2026, the National Institutes of Health (NIH) announced that federal funds could be no longer used to support research that uses human fetal tissue. Additionally, on Jan. 23, NIH announced a pause on submission of new human embryonic stem cell lines to their registry (which is the list of cell lines allowed for use with NIH funding). NIH is holding a Request for Information period through April 2026 to determine whether biotechnologies can reduce or replace human embryonic stem cell use. These actions will make it more difficult to study stem cell biology and fetal development that are important to medical advances in many areas of research.
Grant awards
A hold on the National Institutes of Health posting required notices in the Federal Register affected the agency’s ability to award new grants and issue additional funding for ongoing grants for at least several weeks during the winter. This was partially lifted in late February and some review meetings and other meetings necessary for the awarding of grants were also paused until early April. There are ongoing reviews by federal agencies of specific grants that may result in grant pauses or cancellations, and other policies that are slowing the issuance of awards. New NIH awards for the current federal fiscal year (FY25) are running 30-40% below their normal level for year-to-date funding compared to the same time in FY24.
The cancellation of certain NIH grants related to vaccine hesitancy, diversity, equity and inclusion, and LGBTQ+ health care was ruled illegal by a federal district judge on June 16, 2025. On August 21, 2025, the U.S. Supreme Court issued a ruling that allowed the cancellation of those grants to proceed, with a 5-4 majority saying the grant recipients had filed their cases in the wrong court since they filed in district court and not the Court of Federal Claims. At the same time, a different 5-4 majority of the court ruled that the underlying administration policy used to justify the cuts was likely unlawful and challenges to that policy could proceed in the lower courts and that attempts to restore grants cancelled under that policy could proceed in the Court of Federal Claims.
Meanwhile, the cancellation of grants by the National Science Foundation, which was challenged by a multi-state group including Washington, will be allowed to continue after a federal district judge in New York in early August denied the plaintiffs’ request for a preliminary injunction as the case proceeds.
There was also a broader freeze on federal disbursements issued by the Office of Management and Budget (OMB) on Jan. 27. That OMB order was rescinded by the administration on Jan. 29, 2025, and is also the subject of two federal court orders, one of which was upheld by a federal appeals court on March 26, 2025.
Finally, on Aug. 7, 2025, President Trump signed an executive order directing all agencies that issue grants to create a process by which a political appointee will approve all grant opportunities before they are issued and approve all grants before they are awarded. Grant opportunities are not permitted to be posted by an agency until such a process is in place. It also directs agencies on what sorts of grants should not be issued and that preference should be given to institutions with lower indirect cost rates, among other provisions.
Resources
Even with these court actions, pauses and stop work orders on some grants are impacting employees and operations. This includes instances in which the UW has received a sub-award and the state, agency or institution that is the primary award recipient is choosing to suspend or stop work. The Office of Research, UW Human Resources, Attorney General’s Office and other offices are working directly with relevant unit heads, principal investigators and staff.