The "Protecting American Research and Talent Act" establishes a prohibition on the use of federal funds for certain research activities. Specifically, it mandates that no federal funds may be obligated or expended to award grants or contracts to an institution of higher education for the purpose of conducting fundamental research in collaboration with a covered entity. The term "collaboration" is broadly defined, encompassing activities such as sharing research facilities, data, technical know-how, financial contributions, and joint ventures.

Despite the general prohibition, the head of a federal agency may grant a waiver on a case-by-case basis for an individual grant or contract if it is determined to be in the national security interests of the United States. For an institution to be eligible for such a waiver, its international enrollment rate must be less than 15 percent, and the enrollment of students from foreign countries of concern must be less than 5 percent of its international student body. Students from persecuted groups in foreign countries of concern are explicitly excluded from these enrollment caps. Agencies must also notify Congress within 30 days of making an award under a waiver.

Additionally, the bill requires federal agencies to submit annual reports to Congress on their compliance and that of institutions of higher education with these requirements. These reports must include a list of institutions that applied for waivers, along with their enrollment statistics, and for each waiver granted, a justification and a detailed description of the collaboration. A "covered entity" is extensively defined, including specific foreign academic institutions, entities linked to foreign military or national defense strategies, and individuals associated with these entities or foreign talent programs.