The Office of Management and Budget (OMB) has proposed the most significant overhaul of federal grant regulations since the Uniform Guidance was established in 2013.
If your institution receives federal grants or cooperative agreements, this proposed rule could affect nearly every stage of the grant lifecycle, including how awards are reviewed, how funds can be used, how subawards are managed, and when awards can be suspended or terminated.
Here’s what higher education grant and research administrators need to know.
What Is This Rulemaking?
On May 29, 2026, OMB published a proposed rule in the Federal Register (91 FR 32198) to revise 2 CFR Part 200, the government-wide Uniform Guidance that governs how federal grants and cooperative agreements are administered.
The proposed rule has three stated objectives: improving transparency, accountability, and oversight of federal awards; clarifying the binding legal status of the regulation; and reducing recipient burden.
A note on the name change: Beyond the policy changes, OMB is also proposing to convert the Uniform Guidance into a formal Uniform Grants Regulation (UGR) with a single government-wide effective date. Future amendments would take effect across all federal agencies without requiring each agency to adopt them separately.
Forty-plus federal agencies are joining OMB in this rulemaking, meaning the changes would reach nearly every federal grant program your organization touches. OMB is targeting an October 1, 2026, effective date, and the comment period closes July 13, 2026.
Many of the proposed changes align with Executive Order 14332, Improving Oversight of Federal Grantmaking, released in August 2025.
The Proposed Changes Higher Education Grants Teams Need to Know
1. Discretionary Grant Terminations Would Become Easier for Agencies and Harder to Contest
The proposed rule would expand and codify federal agency authority to terminate discretionary grants mid-performance if an award “no longer effectuates program goals, Federal agency priorities, or the national interest as they exist at the time of the termination.” In plain language, agencies could terminate awards they believe no longer support current program objectives or federal priorities.
A version of this authority has existed since the 2020 update to the Uniform Guidance, but the proposed rule would make it more explicit and broader in scope, and require that it appear in the terms and conditions of every discretionary award.
Agencies would be required to provide written notice with a brief explanation of why termination is in the federal interest, but the proposed rule describes this bar as not “exceptionally high.”
Recipients would get an opportunity to submit a written statement of termination costs. Whether the agency allows those costs would be largely at agency discretion.
Termination for discretionary reasons would not trigger the same administrative appeal rights as termination for noncompliance.
A parallel temporary suspension authority is also proposed, allowing agencies to issue written stop-work orders for up to 90 days.
This provision would apply only to discretionary awards, meaning grants that agencies choose to award through a competitive process.
What this means for your institution: Research projects, education grants, workforce programs, and other discretionary awards could face greater uncertainty if federal priorities change during the award period. Sponsored programs offices may need stronger documentation of obligations, expenditures, deliverables, subawards, and closeout costs in case an award is paused or terminated.
2. Fixed Amount Awards Would Generally Be Prohibited
The proposed rule would generally prohibit fixed amount awards and fixed amount subawards, except in cases where they are specifically authorized by law or allowed through an agency-specific exception.
OMB’s rationale is that fixed amount awards do not require routine monitoring of actual costs incurred or financial reporting, which OMB says limits transparency and oversight.
The proposed rule specifies that existing fixed amount awards issued before a final rule takes effect will not be affected.
What this means for your institution: if your university uses fixed amount awards or fixed amount subawards in research, training, or collaborative grant programs, those structures may need to be reviewed. Sponsored programs and research administration teams may need to prepare for more cost-based reimbursement or advance-payment structures with more extensive financial reporting requirements.
3. New National Policy Conditions Would be Embedded in Federal Awards
The proposed rule would add programmatic restrictions that recipients must comply with as a condition of receiving federal funds.
These include:
- No use of funds for DEI or DEIA policies or practices that violate federal anti-discrimination laws, including racial preferences in employment or program participation.
- No use of funds to promote “gender ideology” as defined by Executive Order 14168.
- No use of funds for gender transition procedures for minors.
- A related provision would also prohibit the use of award funds to promote or support theories of disparate-impact liability.
These conditions would be incorporated into every new federal award through terms and conditions, and noncompliance would constitute a material breach justifying termination and fund recovery.
What this means for your institution: Colleges and universities may need to review federally funded programs, research activities, training initiatives, student services, outreach programs, and related internal practices in light of these proposed conditions. The compliance implications may be relevant for institutions with federally funded education, workforce, public health, social science, or student support programs.
4. Universities Could Face Broader Risk Review Before Receiving Federal Funding
The proposed rule would revise §200.206(b)(2) to expand the factors federal agencies may consider when evaluating applicant risk before making an award.
In addition to existing factors such as financial stability and prior performance, agencies would be able to consider:
- Financial capacity to manage high-dollar awards
- Compliance with foreign gift and contract disclosure requirements under section 117 of the Higher Education Act
- Publicly available information related to research integrity concerns
- Affiliations 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.
What this means for your institution: Federal agencies could take a closer look at your institution’s international partnerships, disclosure practices, and compliance history when evaluating applications. Institutions with extensive global research collaborations or foreign funding relationships may want to review existing disclosure and compliance processes before applying for future awards.
5. Senior Political Appointees Would Review Every Discretionary Award Before It’s Issued
The proposed revision to §200.205 would require federal agencies to conduct a “pre-issuance review” of all discretionary award proposals by senior political appointees before issuance.
Reviewers would be expected to independently evaluate proposed awards and consider how well they align with current administration priorities. The proposal would also give an advantage to institutions with lower indirect cost rates during the review process.
What this means for your institution: Peer review and technical review would not disappear, but political review of discretionary awards would become a formal part of the award process. Colleges and universities may need to pay closer attention to proposal framing, stated outcomes, administration priorities, indirect cost assumptions, and the positioning of research or program activities in relation to agency goals.
6. E-Verify Participation Would Be Required for All Recipients
The proposed rule would add a new internal controls requirement mandating that all recipients and subrecipients participate in the Department of Homeland Security’s E-Verify program to confirm the employment eligibility of employees and contractors hired or performing work in the United States under a federal award.
Final Non-Confirmation notices through E-Verify would also need to be reported to the awarding agency.
What this means for your institution: If your institution does not already use E-Verify for employees and contractors working under federal awards, implementation may need to be on your planning horizon before the proposed October 1, 2026, effective date.
7. Subaward Monitoring, Reporting, and Payment Requirements Would Tighten
The proposed rule would require recipients to confirm that all subawards have been reported to SAM.gov as part of their regular performance reporting. Failure to report subawards could become grounds for termination.
Payment requests would need to include a brief written justification that describes the purpose of the payment and the award-related work it supports.
Payments to affiliates, subsidiaries, and related entities would need to go through the formal subrecipient vs. contractor determination process. They could no longer be treated as internal transfers exempt from classification and reporting.
Pass-through entities would need to ensure subrecipients “do not take actions that could significantly damage the reputation of the pass-through entity, the Federal agency, or the Federal Government.”
What this means for your institution: If finalized, the proposed rule could require research universities to submit more formal documentation, classification, reporting, and monitoring of subaward relationships.
8. International Research Collaborations Could Face New Restrictions
The proposed changes would prohibit the use of federal funds for certain international research collaborations, including partnerships involving foreign adversaries and organizations affiliated with foreign military or intelligence services, unless an exception is approved by the awarding agency.
What this means for your institution: Institutions with international research partnerships may need to review existing collaborations and evaluate whether any projects could be affected by the proposed restrictions.
9. Publication and Research Dissemination Costs Could Become More Difficult to Recover
The proposed changes would make publication-related costs unallowable unless specifically authorized by statute or approved by the awarding agency.
This could affect expenses such as:
- Article processing charges
- Open-access publishing fees
- Journal page charges
What this means for your institution: Universities may need to identify alternative funding sources for publication expenses or seek agency-specific approval if these costs become unallowable.
10. Conference Attendance, Professional Memberships, and Subscriptions Costs Would Face New Restrictions
The proposed changes would place new limits on conference attendance, memberships, and subscriptions charged to federal awards.
Under the proposal, conference costs would require agency approval and would need to be specifically included in the award’s terms and conditions. Membership costs would also require written approval and would need to be tied directly to award activities. Subscriptions to professional periodicals would be entirely unallowable.
What this means for your institution: If finalized, these changes could require universities to revise budgeting, approval, and reimbursement processes for conference attendance, memberships, and other professional expenses charged to federal awards.
Proposed Changes to Reduce Recipient Burden
OMB cites reducing recipient burden as one of the proposal’s primary objectives. Provisions that could benefit higher education institutions include encouragement of multi-year awards, longer application windows of at least 60 days, shorter and more standardized funding announcements with a 500-word executive summary requirement, and greater use of preliminary Statements of Interest before full proposals are required.
The Comment Period
OMB is accepting comments on these proposed changes through July 13, 2026.
Colleges, universities, and research institutions may want to review the proposal carefully and assess how the changes could affect research administration, compliance programs, international collaborations, and federally funded projects.
When submitting comments, OMB asks that you begin each comment with the relevant section number in brackets.
What to Do Now
The proposed effective date of October 1, 2026, is three months after the close of the comment period, with a final rule still to be issued. However, your institution doesn’t need to wait for a final rule to begin assessing potential impacts.
Assess whether your current grants management system or processes can support the proposed documentation, payment justification, subaward tracking, and reporting requirements, and identify where adjustments may be needed before the effective date.
Review your current award portfolio for fixed amount awards, international research collaborations, or publication-related costs that could be affected by the proposed changes.
Assess your research programs and institutional policies for potential compliance gaps under the new national policy conditions, especially if your institution receives significant federal research funding.
Institutions with international research activity may want to review existing partnerships and disclosure practices to make sure they are prepared for expanded applicant risk reviews.
Evaluate conference attendance, membership, and subscription costs currently charged to federal awards and determine how proposed allowability restrictions could affect future budgets.
Audit your subaward management and reporting practices to ensure they follow broader federal efforts to improve oversight and accountability.
Submit comments on provisions that would create operational challenges for your institution.
The comment period closes July 13, 2026, at regulations.gov, docket OMB-2026-0034.
