The Office of Management and Budget (OMB) has proposed sweeping revisions to the rules for procurement and grant making (2 CFR Part 200) in the Federal Register. These changes would solidify an August 2025 executive order that gives political appointees final authority over awarding federal grants.
As noted in a previous SSTI article reporting on the 2025 executive order, “This revamping of the grantmaking process would affect how decisions are made regarding the distribution of billions of dollars in research grants and have a significant impact on research universities.” The current proposal, however, would have an even broader impact; future OMB amendments would take effect government-wide without separate agency rulemaking.
As stated in an article from the National Association of Counties (NACo),
“2 CFR Part 200 consolidated eight separate sets of federal grant rules, which had previously applied differently to states, local governments, nonprofits, universities and hospitals, into a single, consistent set of administrative requirements, cost principles and audit requirements that apply across all federal agencies and recipients. The Uniform Guidance affects every county that receives federal funding, whether directly or as a pass-through entity.”
FYI, a publication of the American Institute of Physics, has remarked that the proposal has been met with alarm from science groups—including the advocacy group Stand Up for Science. An article in Science cites Elizabeth Ginexi, a former program officer at the National Institutes of Health (NIH), who wrote on Substack that “arguably the most consequential change in the rule” was that political appointees would take control of grant awards. “In practice,” she writes, “this gives political appointees a veto over any science that conflicts with the current administration's ideology.” She also writes, “Under this rule, a political appointee can simply override the scientific community’s judgment with no finding of cause.”
Other proposed changes include:
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Expanded authority for federal agencies to terminate awards. The proposed regulation specifies that if a federal award no longer furthers program goals, federal agency priorities, or the national interest as they exist at the time of the termination, it can be terminated. Fixed-amount awards would be eliminated.
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Publication and conference costs. Most publication costs, including page charges, article processing charges, or open access fees for professional journal publications and other peer-reviewed publications, would be unallowable. Additionally, conference attendance fees are not included unless specifically included in the terms and conditions of the award.
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Federal agency review of risk posed by applicants. The proposal lists various criteria for evaluating risk, including memberships and affiliations, history of questionable practices, and engaging in activities or initiatives that are inconsistent with religious liberty laws.
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Awards may not “fund, promote, encourage, subsidize, or facilitate” diversity, equity, and inclusion or “gender ideology.” This would include racial preferences used by the recipient or subrecipient.
Currently, OMB is not proposing updates to the indirect cost rate negotiation. However, a new pre-issuance review would give preference to institutions with lower indirect cost rates (more generally, this review “must ensure that proposals selected for funding are consistent with applicable law, federal agency priorities, and the national interest"). The proposal states that OMB may consider issuing a request for information on the indirect cost rate negotiation system in the future.
Given the potentially broad impact of the proposed rules, organizations might want to review them and comment on any that could significantly impact their programs. The proposal is open for comment until July 13. Comments can be submitted here.