Indirect Cost Rates FAQ's

You are encouraged to start using the FY2027 rate agreement now and are required to use them for any proposal routed for submission on January 20, 2026 or later for budget periods beginning July 1, 2026.

For your revised budget you should use the rate that was used in your proposal submission.
 

Generally, no. Awards made based on proposals submitted under the old rate agreement will typically follow that agreement until the next competitive cycle or significant modification.

Use the FY2027 rate agreement for any renewal or continuation application routed on or after January 20, 2026.
 

Supplemental funds, not included in the originally routed proposal, should use the FY2027 applicable rate, including $50k basis limit for new subaward agreements.

Existing awards and subawards will typically continue at the rate established at the time of the award

If the funding and scope of work for the subaward is from the original award, the previous rate agreement will continue to apply for the same competitive segment. In a future competitive segment, the FY2027 rate agreement will apply, including the $50k basis limit applied to subawards included in that segment.

Federal grants and cooperative agreements generally follow the rate in effect at the time of the initial award for that competitive segment. New competitive segments should propose and be awarded under the FY2027 rate agreement.

Check the specific terms of the non-federal sponsor; however, new funding periods typically adopt the current institutional rates.

Consult with your Contract Administrator to determine the most likely award vehicle and applicable rate. If unable to determine the award vehicle, then first confirm the activity to be performed is for organized research. If yes, the new DoD rate(s) should be used along with this language added to the budget justification: “In accordance with DFARS 231.303 UMD has used its uncapped DoD F&A rate to calculate the budget. Should the DoD agency decide to award a grant or cooperative agreement instead of a contract, UMD will revise its budget to adjust the F&A rate to the capped Organized Research rate in accordance with 2 CFR 200.”

If the activity will not be organized research then the appropriate rate(s) for that activity should be used.
 

Use the rate applicable to federal grants and cooperative agreements

You should clarify the prime sponsor, as DoD contracts may have specific rate requirements different from other agencies.

First confirm the activity to be performed is for organized research. If yes, the new DoD rate(s) should be used along with this language added to the budget justification: “In accordance with DFARS 231.303 UMD has used its uncapped DoD F&A rate to calculate the budget. Should the DoD agency decide to award a grant or cooperative agreement instead of a contract, UMD will revise its budget to adjust the F&A rate to the capped Organized Research rate in accordance with 2 CFR 200.”

If the activity will not be organized research then the appropriate rate(s) for that activity should be used.