Recent federal appropriations laws — including H.R. 6938, the Commerce, Justice, Science; Energy and Water Development; and Interior and Environment Appropriations Act, 2026, and H.R. 7148, the Consolidated Appropriations Act, 2026 — introduce important implications for organizations receiving funding from the Department of Energy (DOE), National Institutes of Health (NIH) and Department of Defense (DoD).
As part of Cherry Bekaert’s commitment to advising government contractors and grant funded organizations, this article highlights the indirect cost-related considerations that merit your immediate attention.
Reinforcement of Agency Obligations To Honor Negotiated Indirect Cost Rates
Both appropriations laws reaffirm the expectation that federal agencies continue to follow existing Uniform Guidance requirements regarding the acceptance and application of negotiated indirect cost rates. Additionally, both appropriations laws prohibit the agencies from using appropriated funds to modify, develop or implement changes to negotiated rates.
While neither bill introduces new language altering Uniform Guidance, their structure and explanatory statements maintain the long standing principle that agencies must respect pre-negotiated indirect rates unless otherwise provided for in statute or program-specific terms. H.R. 6938 specifically rescinds the indirect rate caps implemented by DOE in May 2025 on for-profit (15%) and nonprofit organizations (15%), and state and local governments (10%) and reverts DOE to apply indirect cost rates in the same manner as applied in fiscal year 2024.
Similarly, H.R. 7148 continues established indirect cost funding practices for DoD and NIH, with no provisions authorizing alternative indirect rate restrictions beyond current Uniform Guidance or agency regulations.
Both laws reinforce the application of regulations related to accepting negotiated indirect cost rates included 2 CFR 200.414, including the requirements when a Federal agency deviates from using negotiated indirect cost rates.
Although the bills do not impose new, government wide ceilings, organizations should anticipate increased scrutiny of indirect cost proposals and potential tightening within certain competitive programs.
What Does This Mean for Your Organization?
For government contractors and grant recipients working with DOE, NIH or DoD:
- Expect continued reliance on your negotiated indirect cost rate (NICRA) under Uniform Guidance.
- Stay alert for agency specific updates to program solicitations or funding announcements, as budget-driven constraints may lead to increased scrutiny of indirect costs.
- Understand the Federal agency’s policies related to indirect cost rates in the notice of funding opportunity.
- Now is an ideal time to re-evaluate your FY 2026–2027 indirect cost strategy, given the new funding environment and the likelihood of increased pre award financial review.
How Cherry Bekaert Can Support You
Cherry Bekaert’s experienced government contracting and grants advisors have deep knowledge and experience in guiding government contractors and organizations funded by grants on matters related to indirect rates. Our government contractor and grants advisory team can:
- Project indirect rates in light of the 2026 appropriations landscape.
- Review indirect cost rate proposals for the use of an appropriate indirect cost rate structure and proper application of indirect cost rates.
- Review request for proposals (RFPs) and Notice of Funding Opportunity (NOFO) to identify any restrictions on indirect costs.
- Prepare documentation and provide negotiation support for NICRAs.
- Advise on cost allocation strategies to optimize recoverability.
If you need support or have questions in projecting and optimizing your indirect rates for FY 2026 and beyond, Cherry Bekaert is here to help you move forward.
