The comment window on a sweeping rewrite of federal grant rules closed on July 13, and the docket tells you how much is at stake: more than 340,000 public comments received, 341,699 by Eos's count. If your organization holds a federal award, or plans to apply for one, the next few months will decide the rules you operate under for years.
The Office of Management and Budget published the proposed Regulation for Federal Financial Assistance on May 29, 2026. It would formally convert the Uniform Guidance, the government-wide rulebook at 2 CFR Part 200 that has governed federal grants management since 2014, into a binding federal regulation, and it would change how awards are reviewed, paid, suspended, and terminated. We covered what the rule would change when it landed; here is where things stand now that the docket has closed. The National Council of Nonprofits urged nonprofits to comment before the deadline, and one independent analysis of roughly 50,000 early submissions found about 94 percent opposed the proposal.
What the Proposed Rule Would Change
Law firm analyses of the proposal converge on a handful of provisions that matter most for grantees:
- Broader termination discretion. Agencies could terminate an award that, in their judgment, no longer effectuates program goals, agency priorities, or the national interest, and could suspend an award for up to 90 days, longer by mutual agreement, whenever the agency determines a suspension is in its interest.
- Fewer appeal rights. Objection and appeal procedures would apply only to terminations for noncompliance. Discretionary terminations would leave recipients with no guaranteed administrative review, only litigation.
- Political review of awards. Senior agency appointees would review funding decisions for consistency with agency priorities, and peer review would become advisory rather than determinative.
- New paperwork at payment. Recipients other than states would attach a brief written justification to each payment request, tying the payment to specific award activities, once agency systems are in place.
- E-Verify for everyone. Employees and contractors working in the U.S. under a federal award would need to be run through E-Verify, a requirement the government has so far applied to federal contractors.
- Fixed amount awards mostly gone. The proposal would prohibit fixed amount awards and subawards unless a statute authorizes them, pushing that work back to cost reimbursement.
When Would the New Rules Take Effect?
OMB is targeting October 1, 2026, so that a single set of rules governs awards made and amended in fiscal year 2027. Law firm analyses read that to cover new incremental funding actions on existing awards, not just new awards. That reading deserves your attention: a multiyear award that receives its next year of funding after the effective date could pick up the new terms at that point. Your current award terms govern until then, so pull your notices of award and check when each one's next funding action lands.
Between now and any final rule, OMB must review the comments and decide what to revise. Nothing requires the agency to change course, but comment volume at this scale takes time to process, and a final rule that ignores substantive objections invites litigation. As of July 21, OMB has not said when it will issue the final rule beyond its stated goal of an October 1 effective date.
What the Proposal Leaves Alone
Two things nonprofits watch closely are not changing in this proposal. Indirect cost rules, including the 15 percent de minimis rate, stay as they are; OMB cited fiscal year 2026 appropriations language restricting indirect cost changes. Single audit requirements also carry forward without major revision, though OMB signaled it is studying the single audit process for a later round. If your budget planning assumed the worst on overhead recovery, this round is not where that fight happens.
Five Moves to Make Before the Final Rule Lands
You cannot control what OMB finalizes. You can control how exposed you are when it does. Start with an inventory: every federal award, its end date, and the date of its next expected funding increment. Second, read the termination and stop-work clauses in your current agreements, because those terms, not the proposal, govern your existing awards. Third, scenario-plan the cash flow hit of a 90-day suspension on your largest award; if that number ends your organization, your reserves target just changed. Fourth, tighten your documentation habits now, since per-payment justifications reward grantees who can already map spending to activities. Fifth, keep a revenue conversation going that does not depend on a single federal stream; our funding and grants briefings are a place to start.
The takeaway
The comment period is over and the decision now sits with OMB, which is aiming to have new rules in force by October 1, 2026. Existing awards keep their current terms until new money arrives, so map your renewal and increment dates first. Then stress-test your organization against the two provisions with the sharpest edges: discretionary termination and 90-day suspension. Preparation you do now is useful under any version of the final rule.