In the August 7, 2025 “Improving Oversight of Federal Grantmaking” executive order, the Trump administration announced forthcoming procedural and substantive changes to federal grantmaking that are intended to “strengthen oversight and coordination of, and to streamline agency grantmaking”. The order does not apply to block grants, formula-based grants, or disaster recovery grants.
Federal grant recipients should prepare for these changes in the upcoming weeks and months.
Reinforcing Termination for Convenience. The executive order instructs the Office of Management and Budget to revise the Uniform Guidance to “further clarify and require all discretionary grants to permit termination for convenience, including when the award no longer advances agency priorities or the national interest.” Whether or not the existing Uniform Guidance affords the government an unqualified right to terminate for convenience has been a key issue in court cases disputing the propriety of grant terminations by the Trump administration, and the executive order seeks to resolve this dispute on a going forward basis through regulatory reform and contractual language.
Pending changes to the Uniform Guidance, the executive order instructs agencies to update existing grant terms to ensure they permit termination for convenience and incorporate this modified language into all future awards and applicable regulations. Agencies are required to submit a report within thirty (30) days on the termination for convenience provisions in the agency’s standard grant terms and conditions.
Procedural Changes to Funding Announcements. Each agency head must promptly designate a senior appointee to be responsible for establishing a comprehensive review process for new funding opportunity announcements and discretionary grants. Required elements of the revised process include:
- Senior review and approval of all funding announcements;
- Review of funding announcements by subject-matter experts, especially for scientific research grants;
- Plain language and streamlined application requirements;
- Interagency coordination to avoid duplicative funding opportunities; and
- Pre-Issuance review of all discretionary awards to ensure alignment with agency and national priorities.
Pending implementation of these new procedures, agencies are prohibited from issuing any new funding opportunity announcements without prior approval from the designated senior appointed, except as required by law.
New Criteria for Award Selection. The executive order also sets out new priorities for recipient selection:
- Preference for projects that “demonstrably advance” the President’s policy objectives;
- Prohibition on funding activities involving racial preferences, denial of the sex binary, illegal immigration, or initiatives deemed contrary to public safety or American values;
- Preference for institutions with lower indirect cost rates;
- Broader distribution of grants, reducing repeat awards to the same recipients; and
- Preference for institutions that implement Gold Standard Science standards, as set established in Executive Order 14303 “Restoring Gold Standard Science.”
Additional Fiscal Tightening. In addition to prioritizing recipients with lower indirect rates, the executive order seeks to constrain spending by revising the Uniform Guidance to limit the use of discretionary grant funds for facilities and administration costs and to further restrict the drawdown of funds by grant recipients.
Practice Tips for Grant Recipients
- Anticipate a rulemaking to revise the Uniform Guidance in the upcoming months. Among other things, changes are likely to include changes to allowability of grants funds for facilities and administration costs.
- Look for agency efforts to amend existing grants and cooperative agreements to enhance termination for convenience language.
- Expect a continued slowdown in new funding opportunity announcements as agencies adopt procedural and substantive changes.
- Expect continued scrutiny on financial submissions, with a focus on indirect rates and facility and administrative costs for in flight projects.
- Prepare for increased scrutiny of applications, new requirements in funding announcements, and new selection rubrics for recipient selection criteria.
If you have any questions or need further assistance, please do not hesitate to contact our office.
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Partner Lisa Stone practices public and administrative and is the Chair of PLG's Government Contracts practice group. Lisa has an end-to-end practice advising companies that are pursuing federal and state grant opportunities, from evaluating available funding opportunities and structuring proposals, negotiating the funding instrument with the federal agency, and ongoing compliance during administration of the project. Lisa has worked on a wide range of public contracts for highly regulated entities, including publicly funded research and development projects, joint infrastructure development initiatives and sales of utility services to public entities. She has deep experience with the requirements that apply to public works projects, including Buy America, prevailing wage, public works statutes, and federal contractor compliance requirements.
