On May 29, 2026, the U.S. Office of Management and Budget (OMB) released proposed updates to the Regulation for Federal Financial Assistance,1 often referred to as Uniform Guidance (2 CFR 200).
The rule is intended to advance three overarching objectives:
- Improving transparency, accountability, and oversight in federal grants;
- Clarifying the regulatory status of OMB’s governmentwide grants guidance; and
- Reducing recipient burden.
In connection with the proposal, 41 federal grant-making agencies have introduced conforming updates to their adopting regulations. In some cases, agencies and other entities also have proposed adopting new regulations or policies.
A 45-day public comment period is open through July 13, 2026. Comments may be submitted through regulations.gov.
The following highlights several proposed changes to consider regarding federal grants.
1. Stronger Oversight of Federal Grant Funds
The proposal includes expanded oversight across the grant life cycle, such as:
- Expanded conflict-of-interest disclosure requirements
- Strengthened mandatory disclosure provisions
- Increased scrutiny of applicant risk considerations
- Additional due diligence before issuing payments
- Enhanced subaward reporting requirements
- Increased payment integrity controls
Examples of this expanded oversight include:
- Disclosure of key personnel employed by the awarding agency within the previous two years
- Expanded reporting and enforcement related to fraud, waste, and abuse
- Use of the U.S. Department of the Treasury payment-integrity tools prior to disbursement of federal funds
2. Expanded Merit Review & Award Selection Controls
The proposed revisions place greater emphasis on merit-based award decisions and executive oversight of discretionary funding.
Federal agencies would be expected to:
- Review proposed awards for consistency with applicable law
- Align awards with program purposes
- Conduct additional pre-award reviews for discretionary funding
- Consider agency priorities and national-interest factors during review processes, through a pre-issuance review process designed to confirm that funding selections align with applicable law, federal agency priorities, and the national interest (it notes that discretionary awards, where applicable, should demonstrate alignment with administration policy priorities and program objectives)
The proposal reiterates that federal financial assistance is intended to support authorized public purposes established by law.
3. Program Design Requirements
OMB proposes revisions encouraging federal agencies to design programs that are:
- Focused on achieving meaningful results
- Consistent with statutory authority
- Aligned with authorized uses of federal funds
- Clear in eligibility and program requirements
The proposal is intended to encourage alignment between funding opportunities and authorizing statutes from the outset.
4. Nondiscrimination & Award Administration
Several sections are proposed to be revised to emphasize:
- Compliance with constitutional requirements
- Alignment with applicable federal nondiscrimination laws
- Equal treatment of eligible participants
- Administration consistent with civil rights requirements
The proposal also introduces new provisions related to administration considerations, including disparate-impact theories and certain federally funded activities. For example, a grant recipient may establish a uniform eligibility requirement that applies equally to all applicants. Under a disparate-impact theory, concerns could arise if the requirement results in differing participation rates among protected groups even when the requirement was not adopted with discriminatory intent. The proposed rule would limit reliance on this type of impact-based theory when administering federally funded programs.
5. Federal Payment Controls
OMB proposes additional safeguards designed to strengthen accountability over federal expenditures, including:
- Verification of recipient eligibility through Treasury’s Do Not Pay system
- Additional documentation supporting payment requests
- Increased focus on payment integrity and prevention of improper payments
6. New Reporting & Transparency Expectations
The proposal is intended to increase visibility into recipients and subrecipients through:
- Strengthened subaward reporting requirements
- Improved tracking of federal funds throughout the award structure
- Increased transparency regarding entities receiving federal financial assistance
7. Procurement & Cost Principle Changes
Numerous revisions address cost allowability and procurement practices, such as:
- Additional controls for time-and-materials contracts
- Revised guidance for advertising and public relations costs
- More restrictive treatment of lobbying-related activities
- Added prior-approval requirements for memberships, subscriptions, and conferences
- Clarification that allowable costs should directly support award objectives
Key proposed cost-principle updates include:
- Most advertising and public relations costs become unallowable unless specifically permitted
- Restrictions on voter registration activities funded with federal awards
- Limitations on issue-advocacy activities not aligned with award objectives
- Expanded prior-approval requirements for memberships and subscriptions
8. Reduced Recipient Burden
OMB indicates the proposal is also intended to simplify aspects of grant administration by:
- Encouraging multiyear awards
- Supporting streamlined Notice of Funding Opportunity (NOFO) processes
- Promoting statements of interest and simplified application approaches
- Standardizing requirements across agencies
9. Expanded Termination & Suspension Authority
One of the more significant proposals would expand agency flexibility to suspend or terminate discretionary awards.
If finalized, agencies would have expanded authority, consistent with applicable law, to terminate awards when projects:
- No longer support program goals
- No longer align with agency priorities
- No longer serve authorized public purposes
- No longer serve the national interest
The proposal indicates agencies would provide notice and explanation when exercising this authority.
What This Means for Grant Recipients
If finalized, recipients may experience:
- Increased federal oversight and monitoring
- Expanded disclosure and reporting expectations
- Enhanced payment verification procedures
- Greater emphasis on merit-based funding decisions
- Narrower allowability of certain administrative and outreach costs
- More rigorous subrecipient accountability expectations
- Expanded federal flexibility to suspend or terminate discretionary awards
- Streamlined application and award-management processes in certain areas
Preparing for the Proposed Changes
While the proposed revisions are subject to change, organizations can begin exploring how these updates may affect their operations. Collaboration across programmatic and financial teams can support a clearer understanding of current practices and potential areas of alignment.
Taking a proactive approach may help support a more efficient transition as updates are finalized. Professionals may want to consider staying informed by monitoring OMB and federal agency communications regarding rulemaking status; reviewing inventory policies, procedures, templates, and internal controls influenced by Uniform Guidance; and developing a plan to update policies and procedures following final regulations.
In addition, leaders can focus on communicating anticipated changes to help prepare teams, incorporating updates into future compliance training and monitoring activities, and engaging advisors or legal counsel to explore potential impacts.
For more information on grant changes and preparedness, please reach out to a professional on the Grants Management Services team at Forvis Mazars.
- 1 “Regulation for Federal Financial Assistance,” federalregister.gov, May 29, 2026.