On May 29, 2026, the Office of Management and Budget released proposed revisions to Uniform Guidance (2 CFR Part 200) — the regulation governing how federal grants are administered, managed, and audited. For institutions that rely on federal funding, including colleges, universities, and other large recipients, this proposed rule introduces changes that extend beyond routine compliance adjustments and into areas of direct institutional risk: termination exposure, screening and eligibility, and procurement documentation.
Public comments are open through July 13, 2026, with a proposed effective date of October 1, 2026. As the GrantWin team shared during a July 11, 2026 webinar, institutions with federal grants should be evaluating exposure now, not after the final rule is published.
Expanded Termination Authority
The proposed rule introduces a fourth basis for award termination: that an award "no longer advances agency priorities or the national interest." Current regulation permits termination only for noncompliance, mutual agreement, or under existing award terms. For institutions holding multi-year federal awards, this provision introduces a new category of budget and grant-funded program continuation risk.
Heightened Pre-Award Screening
The proposed rule strengthens agency discretion at the application stage. A new pre-issuance review process, aligned with Executive Order 14332, would apply additional scrutiny before awards are issued. Agencies would gain authority to assess an applicant's financial capacity for high-dollar awards, an applicant's history of "questionable practices" based on publicly available information, and an applicant's organizational affiliations. None of these standards are clearly defined in the proposed rule, which leaves room for interpretation for institutions navigating the application process.
Procurement, Documentation, and Audit Exposure
Several proposed changes will enforce many existing documentation requirements. Time-and-materials contracts would require documentation demonstrating market-rate pricing. Pass-through entities would face new reporting obligations confirming subaward compliance in SAM.gov. Recipients and subrecipients would be required to participate in E-Verify for U.S.-based staff. Each of these is, individually, manageable. Collectively, they raise the standard institutions must meet to demonstrate compliance.
GrantWin Consulting Webinar - What Just Changed and What It Means for Federal Grants (June 11, 2026)
A Structural Change Worth More Attention
One proposed addition merits particular attention from legal and compliance leadership: a new provision permitting federal agencies to cooperate, at their discretion, with private parties pursuing independent legal claims against recipients. While the rule does not impose an affirmative obligation on agencies to assist private litigants, the provision creates a mechanism through which compliance disputes could be pursued outside of normal review channels.
The Comment Period as a Strategic Opportunity
A well-documented comment becomes part of the administrative record available to support future legal challenge. For institutions with significant exposure under this rule, the comment period represents a strategic opportunity. Comments grounded in specific legal or operational impact carry more weight in that record than general objection. It is important to note, however, that OMB is not legally required to adopt comments, but it is required to demonstrate it considered them.
GrantWin Consulting is a federal grant consulting and training firm based in Atlanta, GA, supporting organizations across the full grant lifecycle — from identifying and securing funding to managing and maintaining compliance with federal, state, and private funding requirements. Our services include compliance gap assessments, financial management systems design, development of required written policies and procedures, and audit readiness support. Learn more about our training programs, including the Federal GrantIQ Training Series and the GrantWin Grant Collective, below. Our training is accredited for continuing education credit through NASBA, CFRE, and GPCI.
