U.S. Energy Department’s Policy Overhaul to Save U.S. Taxpayers $405 Million Yearly

The U.S. Energy Department on April 11 announced a new policy initiative targeted at halting inefficient expenditures by universities and colleges. The announcement means that it will limit financial support for indirect costs of research funding to 15 percent, which translates to more than $405 million in yearly cost saving for the U.S. population. The action is in line with U.S. President Trump’s commitment to bring greater efficiency and transparency to federal government spending.

Through its grant programs, the department makes available more than $2.5 billion yearly to over 300 universities and colleges to support scientific research, which has been given the authorization by the department. A share of the funding is allocated to indirect costs, which includes administration and facilities expenditures.

Department data shows that the universities and colleges incur indirect costs of over 30 percent on average, which is remarkably higher than the percentage for other state and local government grant awardees. Accordingly, the department has now limited these expenditures to a standard rate of 15 percent, which should lower costs, enhance efficiency and ensure that department funding is utilized for purposes which align with President Trump’s executive orders.

The department’s funding to colleges and universities is intended to support technological innovation and scientific research, rather than facility or building enhancements and extensive administrative expenditures.  The department’s initiative supports President Trump’s directive to unleash American energy and establish the U.S. as a leading energy producer and exporter. Moreover, the policy overhaul is a part of the administration’s agenda to provide research and innovation, so that the U.S. can gain energy independence and prioritize deregulation.

As it stands, the department is currently undertaking action to terminate all grant awards to colleges and universities that do not comply with this updated policy. All upcoming department grant awards will default to this 15 percent indirect cost rate.