Updates Related to Recent Executive Orders

Federal Funding Updates

Impact of Executive Orders on Federal Funding

This page will be updated as new information is available. We also advise you to subscribe to OSVPR communications through Constant Contact.

Please also see Penn State’s Community updates related to executive action for more information.

Last reviewed: 02/02/2026 | Last updated: 02/02/2026

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Government and Community Relations Website

The Penn State Office of Government and Community Relations provides additional information and FAQ’s related to executive actions.

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Statement from Andrew Read, Senior Vice President for Research

We recognize that there are many questions and want you to know that we are actively monitoring federal agency communications and working with our internal experts and external professional associations both to better understand recent directives and to try to influence and mitigate potential ramifications.

As a research community, we are tasked with creating knowledge for the greater good and with educating our students. As we navigate these new waters and their potential impacts on our University, we must remain committed to this mission and make it our top priority to carry it out.

Please know that we are here to support you. The University remains committed to research and educational excellence, and together we will navigate any changes to come.

Key Documents

Relevant Executive Orders

Current Court Actions and Related Agency Guidance

Federal-wide

  • Preliminary Injunction preventing Federal agencies from “pausing, freezing, blocking, canceling, suspending, terminating, or otherwise impeding the disbursement of appropriated federal funds to the States under awarded grants, executed contracts, or other executed financial obligations based on the OMB Directive, including funding freezes dictated, described, or implied by Executive Orders issued by the President before rescission of the OMB Directive or any other materially similar order, memorandum, directive, policy, or practice under which the federal government imposes or applies a categorical pause or freeze of funding appropriated by Congress.”

National Institutes of Health (NIH)

US Department of Energy (DOE)

  • DOE issued a policy action on 4/11/25, limiting F&A recovery to 15%. The court entered a stipulated judgment vacating the policy action on June 30, 2025.  That judgment is currently effective pending resolution of the Government’s appeal.
  • DOE issued a new memo on 1/27/26 stating that the previously announced restrictions on F&A were “no longer in effect” in light of the FY2026 Appropriations Act prohibiting changes to F&A rates.

National Science Foundation (NSF)

US Department of Defense (DoD)

  • DoD issued an internal memo on 5/14/25, stating its intent to limit F&A recovery to 15% on grants and cooperative agreements to institutions of higher education. DoD issued an internal implementation memo on 6/12/25. The US District Court of Massachusetts entered summary judgment vacating the internal memoranda and 15% indirect cost Rate Cap Policy on 10/15/25, declaring them ‘arbitrary and capricious,’ ‘contrary to binding regulations,’ and ‘contrary to law already on the books’. That judgment is currently effective pending resolution of the Government’s appeal.

US Department of Agriculture (USDA)

  • USDA issued Secretary’s Memorandum SM 1078-14 on July 8, 2025 directing USDA components that administer funding arrangements to impose certain requirements on applicants for and recipients of new USDA funding.  We are monitoring implementation of these directives and will provide guidance to researchers once we receive updated terms and conditions.

Key Points

What does this mean for current Federally funded awards?

  • Programs deemed inconsistent with administration priorities may receive sponsor notification that the project is paused, modified, or terminated.
  • Be patient for Federal agency or sponsor guidance.  NIH and NSF maintain pages with status updates for grantees. Federal Agencies are expected to provide additional instructions.
  • Please do not terminate any of your planned activities at this time unless you are in receipt of a formal modification, stop work order or notice of termination. If you have proposed activities in response to a Federal solicitation, and those activities have been funded by the Federal government, then you should proceed with such activities (including sponsored research, instruction, outreach, REU recruitment activities, etc.) unless and until further guidance is provided.
  • The current administration has issued several Executive Orders addressing Federal support for Diversity, Equity, Inclusion and Accessibility (DEIA) programs. The OSVPR in discussion with the Office of General Counsel has developed the following guidelines for researchers and research administrators. This guidance may be used by Associate Deans for Research and Principal Investigators as they evaluate current awards and proposals to determine whether activities fall into areas their sponsors might consider DEIA. This guidance does not necessarily reflect Penn State’s interpretation or position on federal directives. It is simply a consolidation of publicly available information provided by federal agencies to date.

Guidance for Moving Ahead

Proposal Submissions

  • Proposals will continue to be submitted as long as federal submission systems remain operational.
  • Sponsor proposal review timelines may be extended due to federal pauses in specific funding areas.

What to do for proposals

  • Reconfirm proposal deadlines, as they may change.
  • Verify that funding announcements have not been revised or postponed.
    • Expect that any DEIA-related aspects will be removed from solicitations. Certain other funding announcements may be withdrawn altogether if deemed inconsistent with the Executive Orders listed above.
    • Submit proposals in accordance with sponsor guidelines. Please note that all proposals must be submitted in accordance with Penn State policy RA30. Certain federal awards (including, most notably, USDA) are subject to non-standard F&A rules, but nearly all Federal proposals should be submitted at Penn State’s federally approved F&A rates. If you have questions about a specific proposal, please reach out to Robin Riglin (rbs15@psu.edu). 
    • If a solicitation or RFP requires Penn State to certify that it does not or will not support any DEIA activities, please consult with the Office of Sponsored Programs (OSP) or the College of Medicine Office of Research Affairs (ORA) prior to submission.
  • Sign up for agency or sponsor alerts, if available.

Active Awards

  • Terms and conditions of active awards remain enforceable. Continue invoicing and business as usual unless notified otherwise.
  • OSP/ORA will review any award modifications promptly and distribute to colleges and PIs as soon as possible.
  • If the PI or college personnel receive any sponsor correspondence imposing  work stoppages (e.g., stop work orders, notices of termination, cease and desist orders, or any other guidance indicating the modification or suspension of specific tasks or activities), please act on them immediately and forward them to osp@psu.edu, copying Robin Riglin (rbs15@psu.edu).  If the Office of Sponsored Programs (OSP) receives a communication directly from a sponsor, OSP will inform the PI and College Research Administrator as soon as possible.
  • Closely monitor obligated budget balances to avoid deficits while awaiting future obligations. Anticipated future funding remains subject to availability of funds and should not be considered guaranteed.
  • Certain no-cost extension requests which we expected to be approved have been denied. Please request extensions as soon as you realize they may be needed and plan for the possibility of rejection.

Funding Adjustments

  • Programs may face restructuring, delays, or defunding. Guidance will be shared when available.

Procurements

  • If Funding is Not Obligated:
    • If funding has not been obligated to Penn State to pay for the procurement, please consult with your Associate Dean for Research regarding the associated financial risk.
  • If Funding is Obligated:
    • If you are able to secure equipment, materials, or supplies for your project using your currently obligated funds, you may proceed.
    • Continue to verify the availability of funds and stay informed about any policy changes that could impact your projects.

Reporting

  • Changes to reporting requirements may occur. Respond promptly to updates.
  • Submit all required reports and deliverables on time.

Subawards

  • Any expenses incurred by subawardees within the scope of the subaward and covered by obligated funds will be reimbursed. However, future expenses beyond the current obligation will not be reimbursed unless additional funds are formally obligated.
  • If Penn State receives a stop work order or other modification to an award, the Office of Sponsored Programs will modify or suspend subawards accordingly.

Stop-Work Orders, Terminations, Suspensions, and other Notices

  • If you receive a formal stop-work order, termination notice, or suspension, immediately halt all project activities as specified in the notice and forward to osp@psu.edu with a copy to Robin Riglin (rbs15@psu.edu). If the Office of Sponsored Programs (OSP) receives a termination or suspension notice directly from a sponsor, OSP will inform the PI and the College Research Administrator and Associate Dean for Research as soon as possible.
  • Some sponsors have been asking PIs to “pause”  certain activities. Please forward any such requests to osp@psu.edu with a copy to Robin Riglin (rbs15@psu.edu).
  • If the sponsor requests written certification of compliance, please forward to OSP/ORA for further handling.
  • Only costs incurred up to the date of the stop-work order are typically reimbursable. However, certain “non-cancellable obligations” may also be reimbursable even after the date of termination. Please review this document for more detailed guidance.
  • Please work closely with your Department Head and college research office to consider the impact of grant suspensions or terminations on graduate students and other project personnel. Consider whether affected personnel can be engaged in alternative projects.
  • Please also consider implications for ongoing human subjects research, animal subjects research, etc. If protocols are ending early due to funding changes, you will be expected to document how the work was terminated in a safe and compliant manner. In some cases, Federal agencies may agree to short extensions of terminated projects to support “orderly closeout” of human and animal subjects activities.
  • Even if a project is terminated early, final reports are still required (typically within 90-120 days of the date of termination.) Submit any required final reports or deliverables in accordance with the terms and conditions of the agreement and any special instructions included in the notice of termination.
  • Retain all records and communications related to the project for audit and closeout purposes.

F&A Costs

Facilities and Administrative costs (also known as “F&A” or “indirect costs”) means “those costs incurred for a common or joint purpose benefitting more than one cost objective” (2 CFR §200.1). This includes all common costs required for the performance of sponsored projects, including research facilities, utilities, compliance costs, and general office expenses. The Federal government audits Penn State’s F&A rate each year. If Penn State over-recovers or under-recovers in any given year, the variance is built into the following year’s rates.

University F&A has been receiving additional attention ever since the NIH issued supplemental guidance on February 7, 2025 restricting F&A recovery to 15%. This F&A cap would force Penn State to subsidize the under-recovery with tuition dollars. A Final Judgment and Permanent Injunction was issued on April 4, 2025, preventing NIH from implementing its supplemental guidance at this time. That judgment was upheld by the US Court of Appeals for the First Circuit on 1/5/26 and remains in effect.

DOE subsequently issued guidance on 4/11/25 restricting F&A recovery to 15%. The court entered a stipulated judgment vacating the policy action on June 30, 2025. That judgment is currently effective pending resolution of the Government’s appeal. DOE issued a new memo on 1/27/26 stating that the previously announced restrictions on F&A were “no longer in effect” in light of the FY2026 Appropriations Act prohibiting changes to F&A rates.

NSF issued a notice on 5/2/25 restricting F&A recovery to 15%. A number of universities and national organizations filed a lawsuit seeking to have NSF’s rate cap policy vacated. (See here for a summary of the legal challenge.) The US District Court vacated the 15% indirect cost rate and policy notice on 6/20/25, declaring them “invalid, arbitrary and capricious, and contrary to law.” The Government ended its appeal of the case 9/30/25. 

DoD issued an internal memo on 5/14/25, stating its intent to limit F&A recovery to 15% on grants and cooperative agreements to institutions of higher education. DoD issued an internal implementation memo on 6/12/25. The US District Court of Massachusetts entered summary judgment vacating the internal memoranda and 15% indirect cost Rate Cap Policy on 10/15/25, declaring them ‘arbitrary and capricious,’ ‘contrary to binding regulations,’ and ‘contrary to law already on the books’. That judgment is currently effective pending resolution of the Government’s appeal.

The following resources are provided to inform everyone’s understanding of this important issue:

Federal Data Preservation Resources

Resources for Responding to Attacks on Researchers

Summary of Recent Developments

  • 1/27/2025 – The Office of Management and Budget (OMB) issued OMB Memo M-25-13 calling for a “temporary pause” of all Federal financial assistance agreements to allow for a “comprehensive analysis” of all such programs that may be implicated by the President’s executive orders.
  • 1/28/2025 – The Office of Management and Budget (OMB) issued updated guidance, identifying some limitations on the above.
  • 1/29/2025 – The Office of Management and Budget (OMB) rescinded Memo M-25-13 above.
  • 1/31/2025 – US Department of Justice issued a Notice of Court Order informing agencies of temporary restraining order (TRO) against OMB Memo M-25-13 and implementing guidance to agencies.
  • 2/7/2025 – National Institutes of Health issued supplemental guidance restricting F&A recovery to 15%.
  • 2/10/2025 – U.S. District Court issued an Order of Enforcement clarifying and restating the TRO affecting OMB Memo M-25-13 and related Executive Orders.
  • 2/10/2025 – Temporary Restraining Order issued prohibiting NIH from implementing its supplemental guidance at this time.
  • 2/21/2025 – Preliminary Injunction issued prohibiting Federal agencies from terminating programs that promote DEI and/or requiring Federal grantees and contractors to certify that they do not operate programs that promote DEI.
  • 2/26/2025 – The Trump Administration issued an Executive Order requiring all Federal agencies to withhold issuance of new awards for 30 days while reviewing existing grants and contracts for possible termination. (See full text of the Executive Order for areas of exception.)
  • 3/5/25 – Preliminary Injunction issued preventing NIH from implementing or enforcing its Supplemental Guidance regarding indirect costs.
  • 3/6/25 – Preliminary Injunction issued preventing Federal agencies from “pausing, freezing, blocking, canceling, suspending, terminating, or otherwise impeding the disbursement of appropriated federal funds to the States under awarded grants, executed contracts, or other executed financial obligations based on the OMB Directive, including funding freezes dictated, described, or implied by Executive Orders issued by the President before rescission of the OMB Directive or any other materially similar order, memorandum, directive, policy, or practice under which the federal government imposes or applies a categorical pause or freeze of funding appropriated by Congress.”
  • 3/14/25 – Court of Appeals issued a stay of the 2/21/25 preliminary injunction, pending appeal.
  • 4/4/25 – Final Judgment and Permanent Injunction preventing NIH from implementing or enforcing its Supplemental Guidance regarding indirect costs.
  • 4/11/25 – The US Department of Energy (DOE) issued a policy action limiting F&A recovery to 15%.
  • 4/14/25 – The Association of American Universities, the American Council on Education, and the Association of Public and Land-grant Universities jointly filed a lawsuit on 4/14/25 seeking to halt DOE’s new F&A restriction. 
  • 4/16/25 – A Temporary Restraining Order was issued prohibiting DOE from implementing its new policy at this time.
  • 5/1/25 – NIH issued a policy notice implementing new restrictions on foreign subawards.
  • 5/2/25 – NSF issued a policy notice limiting F&A recovery to 15%. The university community is exploring options in response to this notice; additional guidance is forthcoming. If you have any short-term questions regarding NSF proposals or awards, please reach out to John Hanold (jhh6@psu.edu). 
  • 5/5/25 – A number of universities and national organizations have filed a lawsuit seeking to have the rate cap policy vacated. (See here for a summary of the legal challenge.)
  • 5/14/25 – DoD issued an internal memo stating its intent to limit F&A recovery to 15% on grants and cooperative agreements to institutions of higher education. The memo states that DoD will issue formal policy guidance within 21 days.
  • 5/15/25 – Nationwide Preliminary Injunction issued preventing DOE from implementing or enforcing its F&A rate cap.
  • 5/19/25 – NSF entered into a consent agreement to pause the implementation of its proposed F&A cap, pending resolution after a 6/13/25 hearing. Effective 5/19/25, NSF will revert to issuing awards according to the institution’s negotiated rates while implementation is on hold.
  • 6/12/25 – DoD issued an internal implementation memo further articulating its plans to implement a 15% cap on F&A on grants and cooperative agreements to institutions of higher education.
  • 6/17/25 – A temporary restraining order was issued prohibiting DoD from implementing the 15% rate on new awards issued on or after 6/12/25, or from penalizing institutions for submitting at their full F&A rate.
  • 6/18/25 – DoD announced that it will pause efforts to renegotiate rate caps for existing awards while the temporary restraining order remains in effect.
  • 6/20/25 – The US District Court of Massachusetts vacated NSF’s 15% indirect cost rate and policy notice on 6/20/25, declaring them “invalid, arbitrary and capricious, and contrary to law.”
  • 6/23/25 – The Office of Science and Technology Policy issued Agency Guidance for Implementing Gold Standard Science in the Conduct & Management of Scientific Activities
  • 6/30/25 — The district court entered a stipulated judgment vacating the DOE policy action limiting F&A recovery to 15%.
  • 7/8/25 – USDA issued Secretary’s Memorandum SM 1078-14 directing USDA components that administer funding arrangements to impose certain requirements on applicants for and recipients of new USDA funding.  We are monitoring implementation of these directives and will provide guidance to researchers once we receive updated terms and conditions. 
  • 7/18/25 – A preliminary injunction was issued preventing DoD from implementing or enforcing its F&A Rate Cap Policy or “treating adversely proposals for DOD funding submitted at universities’ negotiated rates.”
  • 9/30/25 – The Government ended its appeal of the NSF case.
  • 10/15/25 – The US District Court of Massachusetts entered summary judgment vacating the DoD internal memoranda and 15% indirect cost Rate Cap Policy, declaring them ‘arbitrary and capricious,’ ‘contrary to binding regulations,’ and ‘contrary to law already on the books’.
  • 1/5/26 – The US Court of Appeals for the First Circuit upheld the District Court’s Final Judgment and Permanent Injunction vacating NIH’s 2/7/25 Supp Guidance limiting IDC recovery to 15%.
  • 1/27/26 – DOE issued a memo stating that its previously announced restrictions on F&A were “no longer in effect.”

Please visit this page regularly for updates: As federal agencies and sponsors make changes or notify us of updates to specific research projects, the Office of the Senior Vice President for Research will keep you informed with guidance, updates, and relevant resources to help you navigate these changes. If you have any questions or concerns regarding the content of this page, please reach out to John Hanold (jhh6@psu.edu).

Acknowledgement: We gratefully acknowledge the assistance of Arizona State University in the initial development of this page.