The Office of Management and Budget has proposed the most sweeping rewrite of government-wide grant rules in more than a decade, publishing its “Regulation for Federal Financial Assistance” in the Federal Register on May 29, 2026. The proposed rule would revise the government-wide rules for federal grants, cooperative agreements, and other forms of financial assistance under 2 CFR, subtitle A, and rebrand the existing framework long known as the “Uniform Guidance.”
OMB has set a comment deadline of July 13, 2026 — 45 days after publication — with comments accepted under Docket OMB-2026-0034 at regulations.gov. The agency has proposed an effective date of October 1, 2026, the start of fiscal year 2027. Because this is a proposed rule rather than a final one, the specifics could change before any provision takes effect, but the draft signals a significant reorientation of how federal assistance is awarded and overseen.
From “Uniform Guidance” to “Uniform Grants Regulation”
At the center of the proposal is a rebranding of the rules at 2 CFR Part 200. OMB would replace the familiar “Uniform Guidance” label with the “Uniform Grants Regulation,” or UGR. The change is more than cosmetic: the proposed rule clarifies that the framework carries “regulatory effect in [its] own right,” reinforcing that recipients and subrecipients are bound by its terms as enforceable regulation rather than as interpretive guidance. The shift in nomenclature is intended to underscore the binding nature of the requirements across the federal assistance landscape.
The Uniform Guidance, finalized in 2013, consolidated a patchwork of circulars into a single set of administrative, cost, and audit rules that has governed federal grantmaking ever since. By recasting that framework as a regulation and layering new conditions on top of it, OMB is proposing the broadest reworking of the structure since its original adoption. The draft would apply across grants, cooperative agreements, and other financial assistance under 2 CFR, subtitle A, meaning the changes would reach essentially the full universe of federal assistance recipients.
Eliminating Fixed-Amount Awards
One of the most consequential proposed changes is the elimination of fixed-amount awards and fixed-amount subawards. OMB states that these instruments “can limit transparency and hinder effective oversight,” and the proposed rule would remove them from the toolkit available to federal agencies and pass-through entities. Organizations that have relied on fixed-amount arrangements — which reduce administrative burden by tying payment to milestones or deliverables rather than to documented actual costs — would need to transition to cost-based structures with the accompanying tracking and reporting obligations. Pass-through entities that have used fixed-amount subawards to simplify oversight of subrecipients would likewise lose that option, potentially increasing the monitoring workload on both sides of the relationship.
New Policy Restrictions
The proposed rule would add a series of policy-driven prohibitions to the conditions attached to federal awards. It would bar recipients from using federal awards to “fund, promote, encourage, subsidize, or facilitate” diversity, equity, and inclusion policies, and it would impose restrictions on what the proposal describes as “discriminatory event services.”
The draft would also extend “Wolf Amendment”-style restrictions on covered foreign collaborations — long associated with certain science agencies — across all federal assistance programs. The result would be a government-wide baseline limiting specified foreign partnerships in federally funded work, regardless of which agency issues the award. Institutions that conduct internationally collaborative research or that maintain partnerships abroad would need to evaluate those relationships against the expanded restrictions, which would no longer be confined to the programs where they originated.
According to a client alert from the law firm Wiley, the revisions stem from Executive Order 14332, and the firm signaled that a more detailed analysis of the practical implications for affected organizations would follow.
Expanded Oversight and Termination Authority
The proposal would broaden the government's discretionary termination authority, allowing agencies to end awards that are not advancing program goals or the national interest. That expanded latitude would give agencies more room to wind down assistance mid-stream based on shifting policy judgments.
Discretionary grants would also face a new front-end gate. The proposed rule would require mandatory pre-issuance review by political appointees applying presidential policy priorities before discretionary awards are made. That review layer would insert senior, politically accountable officials into the award pipeline and could affect the timing and predictability of funding decisions.
Compliance and Cost Requirements
On the compliance side, the proposal would require recipients to participate in E-Verify and to use the “Do Not Pay” system, folding existing federal integrity tools into the standard conditions of assistance. The draft would also cap funding-opportunity-notice executive summaries at 500 words and tighten restrictions on allowable costs, including advertising, publications, conferences, and lobbying.
What It Means for Contractors
For grant and cooperative-agreement recipients and their subrecipients, the proposed rule would touch nearly every stage of the award lifecycle. Recipients that depend on fixed-amount awards would need to plan for a return to cost-reimbursement mechanics, with the documentation and audit exposure that entails. New DEI and foreign-collaboration prohibitions would require organizations to review program activities, partnerships, and event spending against conditions that did not previously exist government-wide.
The mandatory political-appointee review for discretionary grants, combined with expanded termination authority, would introduce more uncertainty into both the receipt and the continuation of awards. E-Verify and “Do Not Pay” participation, the 500-word executive-summary cap, and the tighter cost restrictions on advertising, publications, conferences, and lobbying would add concrete compliance steps that recipients should begin mapping now.
Because the rule remains a proposal, affected organizations have a defined window to weigh in. The July 13, 2026 comment deadline gives recipients, subrecipients, and pass-through entities an opportunity to flag operational concerns — particularly around the elimination of fixed-amount awards and the new review and termination provisions — before the proposed October 1, 2026 effective date. Entities that anticipate being affected would be well served to assess their current portfolios against the draft requirements and to prepare comments that document real-world impacts.
