As we shared on May 29, 2026, the Office of Management and Budget (OMB) issued a long-awaited update to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). The proposed update to the Uniform Guidance is extensive and includes a number of changes that have been anticipated for the past year, as well as some other changes that may garner less attention but could have a significant impact on grantees, subrecipients, and contractors thereunder.
In this article we will touch on many of the more notable changes, but the proposed revisions are extensive. Interested parties should review them and/or consult with experienced practitioners to fully understand changes that may impact individual circumstances.
Generally
OMB issued the revisions as a "proposed rule" and provided interested parties 45 days to submit comments for OMB to consider when formulating a final rule. We anticipate a large number of comments will be submitted, and therefore it is possible that any final rule could look very different from this current proposed rule.
At present, the Uniform Guidance is "guidance" that agencies individually adopt. The proposed rule, however, looks to convert the Uniform Guidance into the "Uniform Grants Regulation" (UGR). The UGR would then serve as a baseline regulation that agencies could modify with supplementary regulations. This would more closely mirror the way in which the Federal Acquisition Regulations (FAR) serve as the baseline regulations for all agencies for federal procurements, which agencies then supplement through their own regulations, such as the Defense FAR Supplement (DFARS). In practice, agencies already adopt the Uniform Guidance and supplement it via agency-specific regulations, so conversion to a UGR approach on its own will not materially impact grantees.
Despite initial direction via E.O. 14332, Improving Oversight in Federal Grantmaking, for OMB to address indirect cost rate matters in the updates, OMB ultimately did not do so in the proposed rule. According to OMB, this was largely because of congressional intervention on the issue through various legislative efforts and related committee report language.
The remainder of the revisions we discuss here are categorized as either Administrative or Public Policy changes.
Administrative Related Revisions
- Added Conflict of Interest Disclosures: The conflict of interest requirements at 2 C.F.R. § 200.112 of the Uniform Guidance include a new provision that will require recipients and subrecipients to disclose "whether any employees who worked on an application for, or proposal in support of, a resulting Federal award, or are anticipated to work on activities under the Federal award, were employed by the awarding Federal agency during the preceding two years prior to application submission." The proposed rule explains this is for "informational [not disqualification] purposes."
- Automatic Involvement of DOJ in Mandatory Disclosures: The mandatory disclosure provision at 2 C.F.R. § 200.113, which requires the reporting of "credible evidence" of fraud and bribery-related violations of federal law, including civil False Claims Act (FCA) violations, to the cognizant Office of Inspector General (OIG), would now require OIGs to transmit such disclosures to the U.S. Attorney's Office for the District of Columbia. This further emphasizes the current administration's stated desire to eliminate waste, fraud, and abuse. Coupled with the inherent ambiguity of what may be perceived as an FCA violation and heightened DOJ focus on the grants system, this expansion has the potential to significantly affect grantees who discover past errors in grant management practices.
- Encouragement of Multi-Year Awards: The proposed rule encourages the use of multi-year awards with multi-year budgets. In particular, OMB is proposing the addition of paragraph (f) to 2 C.F.R. § 200.202, which would likely reduce the burden on grantees by eliminating currently commonplace annual continuation applications and cost allocation challenges that can arise across annual budget periods in multi-year projects.
- Elimination of Fixed Amount Awards: The proposed rule eliminates fixed amount awards and subawards, except where they are authorized by statute, such as in the AmeriCorps program. While fixed amount awards are restricted in size and utility under the current version of the Uniform Guidance, such awards provide a less burdensome mechanism for smaller awards and offer the only true path to "payment for performance rather than compliance," a goal asserted by each of the last three administrations. Nevertheless, OMB asserts that it "is concerned that the use of this type of award can limit transparency and hinder effective oversight, and believes the limited standards for fixed amount awards in part 200 remain inadequate to address these concerns." Notably, while eliminating fixed amount awards, the proposed rule calls for increased use of fixed price contracts by grantees in the purchase of goods or services and "strongly discourages" use cost-reimbursement contracts, requiring notification to funding agencies when using them.
- New Risk-Assessment Considerations in Agency Award Evaluations: The proposed rule substantially enhances 2 C.F.R. § 200.206 to add the following considerations to an agency's risk review: (a) any "history of questionable practices" (such as plagiarism, discredited studies, unlawful discrimination, or activities inconsistent with religious liberty laws), (b) "membership in or affiliation with organizations engaged in activities that violate Federal law, undermine public safety or national security, or advocate for the overthrow of the [U.S.] Government," and (c) compliance with Higher Education Act disclosure requirements regarding foreign gifts. These additions raise significant questions as to what constitutes "membership" or "affiliation" and what may be viewed as "undermining public safety or national security," as many of the terms are undefined. Indeed, this provision may raise First Amendment concerns to the extent it conditions eligibility on positions taken by applicants outside, and unrelated to, the grant program. See Agency for International Development v. Alliance for an Open Society, 570 U.S. 205 (2012).
- Prohibition Relating to Foreign Entities: OMB proposes a new section 2 C.F.R. § 200.220 establishing a government-wide rule generally prohibiting, unless exempt by statute, recipients and subrecipients from using federal funds to support "collaborations, agreements, programs or activities" with "covered foreign countries" or "covered foreign entities." According to OMB, "[t]his provision is intended to ensure that Federal financial assistance is not used, directly or indirectly, to support activities that may pose a risk to U.S. national security, defense, or intelligence interests." Importantly, this prohibition would apply to the use of both direct and indirect funds.
- Increased SAM.gov Reporting: OMB is proposing revisions to 2 C.F.R. §§ 200.329 and 200.332 that would further emphasize recipients' obligations to report all first-tier subawards valued at $30,000 or more within SAM.gov (formerly reporting that grantees were to accomplish via the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS)).
- Modifications to Cost Principles: The proposed rule modifies selected items of cost within the cost principles of Subpart E to, among other things, further narrow allowable lobbying or election activity-related costs (2 C.F.R. § 200.450), further restrict public relations costs (2 C.F.R. § 200.421), require prior approval for costs of attending conferences (2 C.F.R. § 200.432), and generally prohibit subscription costs and organization membership costs without prior approval (2 C.F.R. § 200.454).
- Enhanced Termination Powers: The proposed rule enhances government termination rights in several important respects, which in combination shift power over federal funding decisions and project implementation strategy away from both Congress and grantees and toward executive branch agencies. Most notably, it provides:
- Authority for agencies to terminate discretionary grants (as compared with grants directed by statute, such as formula grants) on the basis that "determines that a termination is in the interest of the Federal agency or pass-through entity, including if a Federal award does not effectuate program goals, Federal agency priorities, or the national interest as they exist at the time of the termination." The proposed texts calls these "discretionary terminations," and describes them as akin to termination for convenience in federal procurement contracts.
- That agency appeal rights currently described at 2 C.F.R. §§ 200.341 and 200.342 would not be available to grantees when their award is terminated via a discretionary termination.
- That agencies may suspend performance of awards, akin to "stop work" orders, for up to 90 days.
- Authority for agencies to direct grantees to terminate subrecipients that pose reputational risk to the federal agency.
Public Policy Related Revisions
The proposed rule would implement several changes to align the UGR with certain policy directives that have garnered much attention over the past year. Most notably:
- Senior Political Appointee Pre-Issuance Review of Discretionary Awards: As revised, 2 C.F.R. § 200.205 would implement EO 14332 by requiring agencies to incorporate a new "pre-issuance review" by "senior appointees" into existing merit review processes for discretionary awards. Senior appointees or their designees are then to apply several "principles when reviewing Federal award proposals," including that:
- "Discretionary awards must, where applicable, demonstrably advance the President's policy priorities";
- "Discretionary awards must not be used to fund, promote, encourage, subsidize, or facilitate" "[r]acial preferences or other forms of racial discrimination," "[i]llegal immigration," or "[a]ny other initiatives that compromise public safety or promote anti-American values";
- "All else being equal, preference for discretionary awards should be given to institutions with lower indirect cost rates."
- "Discretionary awards should include benchmarks for measuring success and progress towards relevant goals and, as relevant for awards pertaining to scientific research, a commitment to achieving Gold Standard Science."
- New Prohibition on Using Federal Funds for Illegal DEI: As revised, 2 C.F.R. § 200.300 would prohibit using federal awards and subawards "to fund, promote, encourage, subsidize, or facilitate [DEI] or [DEIA] policies, principles, or practices that violate any applicable Federal anti-discrimination laws." The revised text does not define which DEI/DEIA activities are unlawful, and OMB acknowledges in the preamble to the proposed rule that it "anticipates that some commenters for this rulemaking may contend that the Unlawful DEI Provision is excessively vague or open to misinterpretation" and points to the U.S. Department of Justice's (DOJ) July 2025 memorandum, the U.S. Supreme Court's affirmative action decision in Students for Fair Admissions v. Harvard, and a December 2025 opinion from the DOJ's Office of Legal Counsel for guidance.
- New Prohibition on Using Federal Funds for "Disparate-Impact Liability": A new section at 2 C.F.R. § 200.218 would require federal agencies and pass-through entities to ensure that "Federal awards are administered in a way that does not promote or support the use of disparate-impact liability" because it "imperils the effectiveness of civil rights laws by mandating, rather than proscribing, discrimination." The section implements EO 14281, which asserts that claims alleging discrimination based on a policy or practice's disparate impact on covered populations, rather than intentional discrimination, are themselves discriminatory because they "all but require[] individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability." Recipients and subrecipients would be prohibited from "adopt[ing], issu[ing], or enforc[ing] disparate-impact liability standards in administering programs or activities supported by a Federal award" and would have to "[r]eview their policies and procedures" to "ensure alignment" with this section.
- New Prohibition on Using Federal Funds for "Gender Ideology" and Gender-Affirming Care for Minors: A revised version of 2 C.F.R. § 200.300 would prohibit using federal awards and subawards "to fund, promote, encourage, subsidize, or facilitate" what EO 14168 described as "gender ideology," including "theories or ideologies that deny the biological reality of sex or the sex binary in humans, or endorse or advocate for the notion that sex is a chosen or mutable characteristic." The revision also prohibits using federal awards and subawards to fund or promote "[t]he so-called 'transition' of a child under 19 years of age from one sex to another, including the chemical and surgical mutilation of children," as defined in EO 14187.
- Replacement of Sexual Orientation/Gender Identity Non-Discrimination with Faith-Based Organization Non-Discrimination: The revised version of 2 C.F.R. § 200.300 would make two additional changes related to non-discrimination policies.
- First, it would delete existing language that provides, "[i]n administering Federal awards that are subject to a Federal statute prohibiting discrimination based on sex, the Federal agency or pass-through entity must ensure that the award is administered in a way that does not unlawfully discriminate based on sexual orientation or gender identity if the statute's prohibition on sex discrimination encompasses discrimination based on sexual orientation and gender identity consistent with the Supreme Court's reasoning in Bostock v. Clayton County, 140 S. Ct. 1731 (2020)."
- Per the preamble, the change is based on the administration's position that the prior administration's interpretation of Bostock "is legally untenable and has harmed women" because the decision "does not mandate gender identity-based access to single-sex spaces or athletics, nor does it impair Congress's guarantee to women of equal opportunity under Title IX."
- Second, the proposed text further prohibits federal agencies and pass-through entities from "discriminat[ing] against or in favor of an applicant on the basis of the organization's religious character, affiliation, exercise, or lack thereof, nor on the basis of conduct that would not be considered ground to favor or disfavor a similarly situated secular organization." The preamble notes that where religion-based legal protections apply, they require "considering and providing reasonable accommodations or exemptions for religious or conscience-based objections as required by law," and that "Federal agencies, pass-through entities, recipients, and subrecipients should not structure internal procedures in a way that would require discretionary case-by-case approval of requests for an accommodation or exemption." This addition seems designed to give further effect to the Religious Freedom Restoration Act (RFRA), 42 U.S.C. § 2000bb et seq.
- New Prohibition on Speech-Based Discrimination in Federally Funded Expressive Activities: A new section at 2 C.F.R. § 200.219 would prohibit both public and non-public entities discriminating "on the basis of viewpoint, content, or subject matter of speech," including based on "political, ideological, or religious" considerations, when "providing services for events, meetings, or other expressive activities." This includes modifying services for or imposing additional fees (e.g., for security costs) in relation to such events and activities. The proposed rule seems motivated in part by concerns about "colleges and universities charging additional fees-sometimes referred to as 'heckler's fees'-to provide security for conservative speakers." For non-public entities, the rule applies only "to the extent that the relevant activities are within the scope of activities funded by a Federal award." The preamble to the rule clarifies that "[o]utside of performance of award activities, the proposed revision must not be construed to require a non-public entity to make its property, facilities, or services available for speech, expression, or events in a manner that would either directly violate its First Amendment rights or otherwise require access or association that would constitute compelled speech or association under the U.S. Constitution."
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The proposed revisions to the Uniform Guidance are substantial. Overall, the proposed updates seem largely designed to:
- Codify administration guidance and revised requirements related to social policy priorities that have been the subject of much attention over the past year;
- Enhance executive agency authority to tailor congressionally authorized programs based on presidential priorities; and
- Enhance executive agency discretion to make funding decisions or terminate funding based upon executive priorities, funded entity foreign relationships, and non-grant-related activities of funded entities that may be perceived as undermining national priorities.
Comments on the proposed rule are likely to be extensive, and the preamble states that OMB intends to issue a final rule by October 1, 2026.
Venable's Government Contracts and Grants Practice attorneys are continuing to review and analyze these proposed changes and are ready and able to provide organizations with insight and assistance. In this regard, we are also planning on hosting a webinar on June 17, 2026, wherein we will discuss these and other proposed changes and share our insights and what we view as the practical implications of these changes. For information and access to this webinar and our future client alerts on grant law, please register at Venable's Government Grants subscription center.
For specific questions about the proposed updates to the Uniform Guidance or other federal grant matters, please feel free to contact Christopher Griesedieck, Dismas Locaria, and Scott Sheffler.