On May 29, 2026, the Office of Management and Budget (OMB), in coordination with several other federal agencies, issued a proposed rule that would substantially revise key aspects of the framework under 2 C.F.R. Part 200 governing federal financial assistance awards. The revisions principally affect grants and cooperative agreements, while also addressing certain requirements applicable to other forms of assistance such as loans and loan guarantees. If finalized, the proposal would represent one of the most significant revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly known as the "Uniform Guidance," since its adoption in 2013, with implications across the lifecycle of federal awards, from pre-award review through post-award administration and termination.

The proposed rule would require recipients and subrecipients of federal awards to reassess their compliance programs in light of changed requirements, including expanded disclosure obligations, policy-based funding restrictions, conflict-of-interest requirements, and heightened subrecipient oversight expectations. Recipients should be prepared for increased documentation, reporting, and internal-control demands across the award lifecycle, particularly for discretionary awards subject to greater agency review and potential suspension or termination.

Comments on the proposed rule are due by July 13, 2026, and OMB has indicated that it is targeting a final rule effective October 1, 2026.

OMB explains that the proposed revisions center around three objectives:

• Improving transparency, accountability, and oversight of federal financial assistance.
   
• Clarifying the regulatory status of OMB’s government-wide requirements.
   
• Reducing administrative burden on recipients.

OMB’s proposed rule is issued primarily pursuant to a 2025 executive order titled "Improving Oversight of Federal Grantmaking." To accomplish these objectives, the proposal would revise and replace key aspects of the existing Uniform Guidance and require conforming changes across agency-specific regulations to create a single framework governing federal financial assistance programs.

Key Structural Changes to Uniform Guidance

A key feature of the proposal is its clarification of the regulatory status of the Uniform Guidance. OMB would clarify that the requirements in 2 C.F.R. Subtitle A carry "regulatory effect in [their] own right" and that future amendments would apply government-wide, thereby increasing centralized control over federal grantmaking policies.

The proposed rule would significantly expand federal oversight over the award process, particularly for discretionary awards. Specifically, it would require pre-award review of discretionary awards by "senior appointees" to ensure that awards align with agency priorities and the national interest. The proposal also contemplates expanded merit and risk review criteria, which would further integrate policy considerations into funding decisions and increase scrutiny at the application stage.

The proposal would also broaden agencies' authority to terminate or suspend awards, with particularly significant implications for discretionary award programs. Agencies would be permitted, subject to statutory limitations, to terminate discretionary awards where they no longer advance program goals, agency priorities, or the national interest, reflecting a framework similar to the Federal Acquisition Regulation’s termination-for-convenience framework.

OMB also proposes to modify key aspects of award structuring and administration. Notably, the proposed rule would eliminate fixed-amount awards and subawards unless otherwise authorized by federal statute, due to concerns about transparency and oversight. It would also require greater standardization and visibility of funding opportunities, including with respect to the posting of notices of funding opportunity on Grants.gov. The rule includes measures intended to streamline the application process, such as simplified submissions and the use of "statements of interest."

New Compliance and Policy Requirements

The proposed rule incorporates a range of new and expanded compliance obligations on recipients and subrecipients of federal financial assistance tied to federal policy priorities. Many of these compliance obligations would apply broadly across federal awards and subawards, while others are targeted to discretionary awards, research and development awards, or specified recipient categories. These include restrictions on the use of federal funds for certain diversity, equity, and inclusion-related activities and other prohibited uses, as well as requirements related to civil rights compliance and nondiscrimination throughout the award process. The proposal also would expand restrictions on certain foreign collaborations and extend national security-related limitations to additional federal financial assistance programs.

Additionally, the proposed rule would expand disclosure requirements for recipients and subrecipients. For example, it would broaden existing conflict-of-interest disclosure obligations by requiring entities to disclose whether personnel involved in an award application or supporting work under a resulting award were employed by the awarding agency within the preceding two years. In addition, enhanced mandatory disclosure provisions would increase the likelihood that certain issues are referred to enforcement authorities, as the proposed rule would require agency Offices of Inspector General that receive disclosures under this section to transmit them to the U.S. Attorney’s Office for D.C. within 10 days of receipt.

Practical Implications for Applicants, Recipients, and Subrecipients

For entities applying for, receiving, or administering federal financial assistance, the proposed rule would create new compliance and oversight considerations. Organizations should begin evaluating whether existing internal controls and compliance frameworks are sufficient to address the documentation, disclosure, and reporting obligations set forth in the proposed rule.

The proposed pre-award review requirements for discretionary awards would give agencies greater ability to evaluate applications against agency priorities and broader policy objectives, which could affect award timing, selection, and funding certainty. Coupled with expanded authority to suspend or terminate discretionary awards that no longer advance program goals, agency priorities, or the national interest, the proposal could increase the risk profile of discretionary award programs and create additional uncertainty for recipients relying on discretionary federal funding for long-term programs.

These risks may be amplified where new or expanded compliance obligations incorporate executive order language or policy standards that are subject to ongoing litigation or require further agency interpretation. Recipients should consider these uncertainties when assessing compliance posture, program continuity, and future reliance on discretionary federal funding.

Below are some practical steps for recipients of federal awards to prepare for the changes called for in the proposed rule:

• Review current programs and activities for alignment with new policy-based restrictions.
   
• Assess whether foreign collaborations or affiliations may present compliance risks under the proposed framework.
   
• Inventory existing federal awards and pending applications.
   
• Review award terms and subaward templates for potential updates.
   
• Evaluate conflict-of-interest procedures, including processes for identifying personnel involved in applications or award performance who were recently employed by the awarding agency.
   
• Assess subrecipient oversight processes in light of new and expanded requirements.
   
• Incorporate anticipated changes into future funding strategies and proposal development efforts.

Overall, the proposed rule represents a notable shift toward increased federal oversight, expanded agency discretion in certain award programs, and greater integration of policy considerations into the federal financial assistance framework. Entities affected by the proposed rule should closely review its provisions and consider submitting comments prior to the July 13, 2026, deadline on Regulations.gov.

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