NIH Continues Grant Awards Overhaul With New Limitations on Foreign Subawards

On May 1, the NIH issued an update on its grants policy, establishing a “new award structure” that would prohibit foreign subawards from being nested under the parent grant, replacing them with direct awards linked to a prime award. Effective immediately, NIH will no longer issue awards that include a subaward to a foreign entity until the new structure is implemented. The notice did not limit this new structure for foreign recipients to any particular jurisdiction, potentially impacting a wide range of grants and limiting international collaboration with U.S. researchers through the subaward model.

In a statement posted by NIH Director Dr. Jay Bhattacharya regarding the new award structure, Dr. Bhattacharya indicated that this new structure effectively amounts to a freeze on foreign subawards going forward. “As we transition to this new system, NIH will no longer allow new subawards to foreign institutions. As new competing awards are issued or non-competing awards re-issued, NIH will no longer support foreign subawards in them.” Both the updated policy and Dr. Bhattacharya’s comments indicate that reasons for this new structure include national security, a lack of transparency around how subaward funds overseas are spent, and the inability to track and receive reports on grants. While not explicitly stated as a reason for the policy change in the announcement, the change comes after the Trump Administration and Congressional committees have scrutinized subawards made to Chinese institutions and institutions in foreign countries of concern. Neither the statement from Dr. Bhattacharya nor the guidance provide specific details why all foreign jurisdictions would give rise to national security concerns.

The proposed change is not retroactive, applying only prospectively. However, grant renewals and non-competing continuation awards will fall under the scope of this new structure and the funding freeze in place until the new structure is rolled out, which means that no payments to foreign researchers will be made between now and when the new structure is put into place. NIH anticipates implementing the new award structure no later than September 30, 2025, meaning awards that require renewal or continuation and rely on a foreign subgrantee before fiscal year 2026 may be interrupted. Notably, this new policy does not prohibit funding to support foreign consultants or purchasing unique equipment or supplies from foreign vendors.

Grantees will need to determine if new grants or renewals are impacted by this new structure and if the research can be conducted without a foreign subaward. This gives existing grantees and those submitting new grants very little time to pivot to find non-foreign subawardees to support grants, especially grants up for renewal in the next few months. Grantees will need to look for domestic alternatives in order to complete the research where they are relying upon foreign subawardees. Otherwise, the NIH indicates that if the project is not “viable” with the foreign subawardee it “will work with the recipient to negotiate a bilateral termination of the project, taking into consideration any need to support patient safety and/or animal welfare.” It is unclear whether this means that the project can continue to completion, but indications from the policy and Dr. Bhattacharya are that termination of the grant and the project is a likely outcome.

In conjunction with the new certifications being added to grant awards, this new policy potentially further limits NIH grant funding opportunities for individuals and institutions. Crowell attorneys are assisting clients with responding to such NIH changes, including certification issues, grant termination appeals, and government affairs counseling before Congress and the Administration. Please reach out if you have any questions.