The Office of Management and Budget (OMB) has issued one of the most significant proposed overhauls to federal grants management in over a decade. Published in the Federal Register on May 29, 2026, the proposed rule would revise the Uniform Guidance — OMB’s governmentwide framework governing grants, cooperative agreements, and other forms of federal financial assistance — codified at Title 2 of the Code of Federal Regulations (2 CFR). If finalized, the changes will touch virtually every organization that receives federal funding, from universities and nonprofits to state agencies and private contractors.

Comments are due July 13, 2026. Organizations with significant federal award portfolios should act now.

What Is the Uniform Guidance, and Why Does It Matter?

The Uniform Guidance — formally titled the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards — is the foundational rulebook for federal grantmaking. Originally published in 2013 and last revised in 2024, it sets the rules that federal agencies and grant recipients must follow across the entire award lifecycle: program design, application, award terms, cost allowability, reporting, audits, and closeout.

OMB’s authority to issue and revise this guidance flows from its statutory mandate under 31 U.S.C. § 503 to provide “overall direction and leadership to the executive branch on financial management matters.” The proposed rule is OMB’s most comprehensive revision since the Uniform Guidance was established, and it carries the weight of dozens of co-sponsoring agencies — including HHS, DOD, DOE, EPA, DOT, NSF, and many others — all of which are simultaneously proposing conforming revisions to their own implementing regulations.

Three Core Objectives

OMB frames the proposed rule around three stated objectives:

1. Transparency, Accountability, and Oversight. The administration contends that federal grantmaking has suffered from a lack of meaningful oversight — allowing programs to drift from their authorized public purposes and taxpayer dollars to be wasted or misused. The proposed rule would require agencies to return to award programs that align with “essential public purposes authorized by law,” with tighter controls on program design and heightened scrutiny throughout the award lifecycle. The preamble is blunt in its criticism of grantmaking practices during the 2021-2024 period, citing examples ranging from stalled broadband deployment to questionable NSF grant allocations.
2. Clarification of OMB’s Regulatory Authority. A persistent point of confusion in federal grants law has been whether OMB’s requirements in 2 CFR subtitle A carry the force of binding regulation or merely constitute guidance. The proposed rule moves to settle this question squarely, reinforcing OMB’s position that the 2 CFR requirements are a formal OMB regulation — not discretionary policy — and that federal agencies are obligated to implement them accordingly.
3. Reduction of Recipient Burden. Not all the proposed changes will add compliance costs. OMB also proposes to eliminate conditions it characterizes as unnecessary ideological add-ons that have historically consumed recipient time and resources without advancing the core purposes of award programs. The theory is that leaner award conditions allow recipients to focus on project delivery rather than compliance theater.

Key Practical Implications for Recipients

• Expect more scrutiny at the program design and award selection stages. The proposed rule signals that federal agencies will face renewed pressure to ensure that programs are designed with tightly defined public purposes and that selection criteria do not favor applicants based on identity-based policies. Organizations that have structured their programs or proposals around DEI frameworks should anticipate that such criteria may no longer be permissible — or even permissible to reference — in federal award processes.
• Award terms and conditions may be streamlined — but differently than before. While the 2024 revision focused heavily on reducing administrative burden across the board, the 2026 proposal narrows its burden-reduction focus. Requirements linked to what OMB characterizes as misaligned policy objectives are on the chopping block; core compliance requirements around cost principles, financial management, and audit obligations are expected to remain largely intact.
• Single Audit Act requirements remain in play. The proposed rule continues to implicate the Single Audit Act framework, which requires independent audits of organizations expending $1 million or more in federal awards annually. Changes to cost allowability and oversight standards could affect how auditors evaluate compliance and what counts as a reportable finding.
• Multiple agencies, one comment opportunity. Because the proposed revisions span dozens of federal agencies’ implementing regulations simultaneously, a single comment submitted to OMB’s docket (OMB–2026–0034 at regulations.gov) can address the government-wide policy framework. Organizations with sector-specific concerns — healthcare, higher education, defense contracting, environmental programs — should also consider filing agency-specific comments where the conforming revisions have distinct implications.

The Comment Deadline Is July 13, 2026

This is a proposed rule, not a final rule — meaning this is the moment to shape it. OMB has specifically requested that comments identify the relevant section number (e.g., “[200.414]”) at the start of each comment to ensure they are properly considered.

Organizations that rely on federal funding should take this opportunity seriously. Changes to 2 CFR affect not just compliance obligations but how programs are designed, how costs are allocated, and how recipients are held accountable. The window to engage is short.

If you have any questions about this noteworthy development or otherwise require assistance, please do not hesitate to contact Aron Beezley or Nathaniel Greeson.