A significant 412-page proposed rule available here from the Office of Management and Budget (OMB) that would revise government-wide requirements for federal financial assistance, including grants, cooperative agreements, pass-through awards, and other forms of federal assistance.
The proposed rule, Regulation for Federal Financial Assistance, would revise 2 CFR Part 200, commonly known as the Uniform Guidance, which establishes federal administrative requirements, cost principles, and audit requirements for federal awards. According to the update, OMB’s proposal is intended to strengthen transparency, accountability, oversight, and compliance across federal grantmaking programs, while also making conforming changes across federal agency regulations. Public comments are due to OMB by July 13, 2026.
This proposal may have important implications for all stakeholders involved in federal housing programs.
Among the most significant proposed changes are:
- Elimination of Fixed-Amount Awards: OMB is eliminating fixed-amount awards and subawards, claiming they “limit transparency and hinder effective oversight.”.
- Mandatory E-Verify & “Do Not Pay” Systems: The rule mandates participation in DHS’s E-Verify program for recipient employees and requires the use of Treasury’s Do Not Pay system prior to disbursement.
- New “Discretionary Termination” & Suspension Authority: Modeled after the Federal Acquisition Regulation (FAR) “termination for convenience” framework, federal agencies will gain expanded authority to terminate awards that “no longer effectuate program goals, Federal agency priorities, or the national interest,” alongside a new temporary suspension authority.
- Political Review of Discretionary Awards: The rule establishes a mandatory pre-issuance review of all discretionary awards by “senior appointees” (political appointees) to ensure awards advance the administration’s specific policy priorities.
- New Policy Restrictions & Bans:
- DEI: Strict prohibitions on using federal awards to “fund, promote, encourage, subsidize, or facilitate” Diversity, Equity, and Inclusion (DEI) policies.
- Event Services: A new prohibition on “discriminatory event services” by public entities receiving federal awards.
- Foreign Collaborations: A new ban on “covered foreign collaborations” involving certain foreign countries or entities, extending strict “Wolf Amendment” restrictions (originally targeting China) across all federal financial assistance programs.
- New Cost Restrictions: The proposal places tighter restrictions on allowable costs, directly impacting what can be charged to an award regarding advertising, public relations, publication costs, conferences, and lobbying.
- Application Streamlining: the rule encourages multi-year awards to reduce application frequency and streamlines Notices of Funding Opportunities (NOFOs) via Grants.gov with a 500-word cap on executive summaries and the use of “Statements of Interest.”