“Regulation for Federal Financial Assistance” Proposed Rule Summary

On May 29, 2026, the Office of Management and Budget (“OMB”), together with 41 federal grant-making offices and agencies, published a proposed rule titled Regulation for Federal Financial Assistance (the “Proposed Rule”) that would substantially revise 2 C.F.R. subtitle A and part 200, the governmentwide framework governing grants, cooperative agreements and other forms of federal financial assistance. OMB states that the proposal is intended to improve transparency, accountability and oversight; clarify that subtitle A operates as an OMB regulation rather than guidance; and reduce recipient burden.

As a practical matter, however, the Proposed Rule would do more than make targeted technical revisions. It would convert subtitle A from “Uniform Guidance” into a directly binding OMB regulation, centralize future governmentwide grant rule changes at OMB, and revise the baseline rules governing how awards are structured, administered, monitored and, where applicable, suspended or terminated. The proposal would also add or revise a number of operational requirements affecting recipient eligibility screening, pass-through entity oversight, payment documentation, internal controls, workforce verification, procurement and selected cost principles.

Several features of the Proposed Rule are likely to have especially broad practical significance across sectors. First, the proposal would expand federal oversight before and after award through revised merit and risk review, mandatory Do Not Pay screening, payment-justification requirements, and more prescriptive pass-through monitoring obligations, including subaward reporting and a new “reputational harm” concept tied to potential termination outcomes. Second, it would narrow or eliminate several tools and cost categories on which recipients and subrecipients commonly rely, including fixed amount awards and subawards, certain membership and subscription costs, publication costs absent statutory or case-specific approval, and conference costs absent express agency approval in award terms and conditions.

Third, the Proposed Rule would broaden the government’s mid-award intervention tools by standardizing additional termination grounds, adding a temporary suspension mechanism, and requiring more detailed unwind and cost-mitigation steps following suspension or termination. Fourth, the proposal would impose new compliance obligations that extend beyond grants administration alone, including mandatory participation in the Department of Homeland Security’s (“DHS”) E-Verify program for employees and contractors hired in or performing work in the United States under a federal award, as well as changes affecting procurement, contracting, recordkeeping and internal governance.

The Proposed Rule would also introduce significant substantive limitations in certain policy and research-related areas. These include new restrictions tied to foreign collaboration and research-award eligibility, Section 117-related risk review, and additional national-policy requirements that would be incorporated into award terms and conditions and enforced through the part 200 framework. For many recipients, subrecipients and vendors, the cumulative effect would be less a single compliance change than a broader shift in the operating environment for federal financial assistance, with implications for award design, staffing, subaward structures, drawdown practices, contracting and routine cost charging.

Accordingly, the Proposed Rule is best understood as a comprehensive revision to the governmentwide grant-management baseline. The sections linked here and below summarize the principal changes by topic and highlight the operational and compliance considerations most likely to matter for recipients, subrecipients, pass-through entities, contractors and other stakeholders assessing the proposal.

Click here for the full break down of the proposal.

THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING NEW OMB FUNDING RULES. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.