Congress has acted this month to reverse a damaging policy that would have made doing business with the DOE impossible for many small businesses, including those that participate in the SBIR/STTR programs.
In may of last year the Department of Energy issued a flash policy memo limiting indirect rates on grants to for-profit entities to 15%. This severely impacted small businesses contracting with the DOE, including SBIR recipients. For businesses without significant cash reserves or financial backing, an indirect rate limit of 15% is simply not economically viable, and would result in losses of 30%-35% of the value of the grant. Few small businesses can afford to absorb such large losses. Shortly after the memo was issued, SBTC sent a letter to the Secretary of Energy Chris Wright asking that he review this policy and reverse it:
Fortunately, Congress has included a provision to reverse this damaging policy in one of the omnibus spending bills that passed into law. The bill, H.R.6938 – Commerce, Justice, Science; Energy and Water Development; and Interior and Environment Appropriations Act, 2026, included the following provision:
SEC. 313. In making Federal financial assistance, the Department of Energy shall continue to apply the indirect cost rates, including negotiated indirect cost rates, as described in section 200.414 of title 2, Code of Federal Regulations, including with respect to the approval of deviations from negotiated indirect cost rates, to the same extent and in the same manner as was applied in fiscal year 2024: Provided, That none of the funds appropriated in this or prior Acts or otherwise made available to the Department of Energy may be used to develop, modify, or implement changes to such negotiated indirect cost rates.
This language now reverts indirect cost rates back to how they were determined in 2024, the year before the 15% limit was set. This new law will be great relief to small businesses that contract with the DOE, as well as the DOE SBIR program, which will continue to benefit from research and technology generated by the most innovative companies in America.