Proposed Uniform Guidance Regulation: What Federal Award Recipients Should Know

Key Takeaways

• On September 2, 2026, H.R. 6500 paused OMB’s proposed overhaul of the Uniform Guidance.
• OMB’s proposal would rename 2 CFR Part 200 the Uniform Grants Regulation and make it a binding, government-wide regulation rather than interpretive guidance.
• Proposed changes include broader agency authority to terminate discretionary awards, elimination of fixed-amount awards, and a new E-Verify participation requirement.
• Cost principle revisions would make public relations, commencement, and academic subscription costs unallowable, among other categories.
• Current Uniform Guidance requirements remain in effect during the pause, so recipients should prepare without changing established compliance practices yet.
• Organizations can use the delay to build an award-level applicability tracker and flag awards for a terms-and-conditions review before the rule is finalized.

Federal grant requirements may be changing again. On May 29, 2026, the Office of Management and Budget (OMB) proposed revisions to multiple sections of Title 2 of the Code of Federal Regulations, including 2 CFR Part 200. The proposal follows the broad 2024 Uniform Guidance revisions and would make another significant set of changes to the federal financial assistance framework.

While the proposal is not yet final, it signals a trend toward greater compliance, creating more centralized, prescriptive, and sensitive award requirements. State and local governments, nonprofit organizations, institutions of higher education, pass-through entities, and other recipients should understand the potential operational and compliance effects now.

Where Does the Proposal Stand Today?

Since the proposal was published, the implementation timeline has changed. The public comment period closed July 13, 2026. On September 2, 2026, the President signed H.R. 6500, the Continuing Appropriations and Extensions Act, 2027. Section 157 prohibits the May ruling, or similar rules, from being issued or finalized through December 11, 2026. Any rule issued before enactment would have no force or effect through that date. Accordingly, OMB cannot finalize the proposal before December 12, 2026.

Current Uniform Guidance requirements remain in effect during this period. For grants management teams, the delay provides additional time to map the proposed changes to existing policies, award templates, subrecipient and procurement processes, and cost-allowability workflows without prematurely changing current compliance practices.

What Is the Uniform Grants Regulation?

The proposal would rename the framework, the Uniform Grants Regulation, and clarify the regulatory effect of OMB’s government-wide requirements. Participating agencies would adopt the revised structure through the joint rulemaking, and future government-wide amendments issued by OMB through notice-and-comment rulemaking would apply without requiring each participating agency to conduct a separate adoption process.

For recipients, a more uniform structure could reduce some agency-by-agency variation. It could also accelerate the effect of future government-wide revisions. Organizations may need a stronger process to monitor OMB rulemaking and evaluate whether new requirements affect grant policies, internal controls, subrecipient arrangements, and award administration.

From a grants management perspective, the transition will require more than a policy update. Recipients should be prepared to identify which version of the requirements governs each award and to connect that determination to award issuance, modifications, agency-specific terms and conditions, and related subawards and contracts. An award-level applicability matrix can help prevent organizations from applying a new requirement too early to an existing award or overlooking it when a new or modified award incorporates updated terms.

The Proposed Changes: Pre-Award and Award Requirements

Program Design and Award Decisions

The proposal would revise the requirements for program planning, merit review, and applicant risk review. Federal programs would be designed around stated goals and objectives, and agencies would evaluate applications in light of applicable law, agency priorities, and the national interest. These concepts may also appear in notices of funding opportunities and award terms and conditions.

Expanded Termination Provisions

A central feature of the proposal is broader federal agency discretion over discretionary awards. Award terms would identify termination provisions, including circumstances in which an agency may determine that continued funding no longer advances program goals or agency priorities. For recipients, this change could increase the importance of documenting performance against award objectives, monitoring changes to award conditions, and evaluating the financial and operational risks of relying on multi-year federal funding.

For grants management teams, that risk extends into day-to-day portfolio management. Organizations may need stronger procedures for retaining evidence of performance, documenting communications with the awarding agency, tracking unliquidated obligations, and understanding the downstream effect of a termination or funding reduction on subawards, contracts, staffing, and closeout. These records can become critical when an organization must demonstrate progress, support costs incurred before termination, or rapidly transition an award to closeout.

What Happens to Fixed Amount Awards?

The proposed revisions would generally remove authority for fixed-amount awards unless a federal statute authorizes their use. Because fixed amount awards can reduce certain administrative requirements when performance milestones are met, recipients who use or receive this type of award should evaluate how a change could affect budgeting, documentation, and program delivery.

The Proposed Changes: Post-Award Administration

Internal Control Frameworks

The proposal would remove the current direction for recipients and subrecipients to align their internal controls with recognized frameworks. The proposal does not prohibit the frameworks, so organizations can continue to use them as practical structures for designing, documenting, and evaluating federal award controls. Common frameworks may include: the Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control–Integrated Framework or the US Government Accountability Office’s Standards for Internal Control in the Federal Government.

E-Verify

The proposal would add an E-Verify participation requirement for recipients and subrecipients to confirm employment eligibility for employees and contractors working under a federal award. If finalized, organizations would need to assess responsibility for compliance, related documentation, and the flow to subrecipients and contractors.

Procurement and Contracting

The proposal would place additional conditions around cost-reimbursement contracts, including agency notification and written justification. It would revise the small-business contract provision, change domestic preference requirements, and require applicable domestic preference terms to flow through subawards, contracts, and purchase orders. These changes could affect procurement templates, contract clauses, vendor selection, and supporting documentation.

Practically, recipients should not treat these changes as procurement-only requirements. Grants management and procurement functions should be able to trace applicable award terms into the solicitation, contract, or purchase order, and procurement file. A documented award-to-procurement review can also help distinguish requirements that apply to every purchase from those triggered by the funding source, dollar threshold, contract type, or specific award condition.

Subrecipient and Contractor Determinations

The proposal would clarify that payments to related entities are not automatically outside the recipient-versus-subrecipient analysis. Organizations with component units, affiliates, or other related parties receiving federal funds should continue to evaluate the substance of each arrangement and document its classification under the applicable requirements.

This is an ongoing grants management issue—not just a one-time procurement decision. Classification should be documented when the relationship is established and revisited when the scope, payment structure, performance responsibility, or level of programmatic decision-making changes. For pass-through entities, the determination drives the downstream agreement structure, risk assessment, monitoring, reporting, and closeout responsibilities.

Which Costs Would Become Unallowable?

The proposal would revise the allowability of several cost categories. Notable proposed changes include:

• Public relations costs are unallowable, subject to limited exceptions for specified activities
• Commencement and convocation costs are treated as unallowable
• Conference costs are allowed when the federal agency expressly approves them in the award terms and conditions
• Written approval is required for otherwise allowable fundraising and investment management costs
• Restrictions on lobbying costs are expanded
• Business, professional, and academic subscriptions, as well as technical periodicals, are unallowable
• Publication costs are unallowable unless required by federal statute or approved by the federal agency.
• Add a separate provision to address unallowable abortion-related costs.

Because the final language may differ from the proposal, recipients should avoid changing cost allocation or reimbursement practices solely in response to the proposed rule. A targeted review of affected cost categories, however, can help identify awards, policies, and accounting processes that may require attention if the provisions are finalized.

The impact of grants management is the most visible at the point of approval and reimbursement. Organizations should know where proposed costs are identified before they are incurred, who is responsible for obtaining any required prior approval, how the approval is retained with the award record, and how finance staff is alerted to award-specific restrictions. That workflow becomes especially important when the same cost category may be allowable under one award and restricted under another.

Audit Requirements and the Compliance Supplement

The proposal also would revise the process for agency input to the Compliance Supplement. The proposed language could affect whether federal agencies provide OMB with annual updates on compliance requirements, raising questions about the timing and frequency of future supplements. The proposal does not eliminate the Compliance Supplement or change current-year audit requirements. Auditors and auditees should continue to use the supplement applicable to the audit period and monitor OMB and cognizant agency communications for final developments.

What Organizations Can Do Now

• Inventory federal awards and identify programs that rely heavily on discretionary or multiyear funding.
• Review award terms, performance measures, termination provisions, and procedures for tracking changes to grant conditions.
• Assess whether procurement policies and templates address contract type, domestic preferences, small-business considerations, and flow-down requirements.
• Identify cost categories that could be affected and determine where prior approval or stronger documentation may be needed.
• Evaluate processes for subrecipient classification, monitoring, related-party arrangements, and contractor oversight.
• Coordinate among grants management, finance, procurement, human resources, legal counsel, internal audit, and program leadership.
• Monitor the final rule and agency implementation instructions before changing established policies or audit approaches.
• Develop an award-level applicability tracker that captures the governing version of 2 CFR Part 200, agency-specific requirements, key prior approvals, and flow-down provisions for subawards and contracts.
• Identify awards expected to be issued, renewed, continued, or materially modified around the effective date and flag them for an award-specific terms-and-conditions review before spending begins.

Preparing for the Next Phase with EisnerAmper

OMB’s proposal represents more than a technical update to 2 CFR Part 200. If finalized substantially as proposed, it could change how federal programs are designed, how recipients are selected and monitored, which costs are allowable, how procurement and employment requirements are administered, and when discretionary awards may be modified or terminated. Organizations should use the statutory pause through December 11, 2026, as a readiness period rather than an implementation date: document likely policy, system, template, training, and subaward changes now, but keep current requirements in place until a final rule is issued and the applicable effective and transition provisions are known. Early, cross-functional planning will help recipients adapt without disrupting program delivery or weakening accountability for federal funds.

EisnerAmper’s Government team understands the proposed changes and is ready to help organizations: identify areas of exposure, strengthen documentation, and establish a disciplined process ahead of the final rule. If the proposed changes to Uniform Guidance could affect your organization or funding, contact our team and start building your roadmap to compliance.