In August, President Trump signed an executive order titled Improving Oversight of Federal Grantmaking “to improve the process of Federal grantmaking while ending offensive waste of tax dollars.” The order stated “there is a strong need to strengthen oversight and coordination of, and to streamline, agency grantmaking to address these problems, prevent them from recurring, and ensure greater accountability for use of public funds more broadly. The Government holds tax revenue in trust for the American people, and agencies should treat it accordingly.” The changes proposed under the order will significantly alter the federal grants process and will affect universities, nonprofits, businesses, and other entities that rely on federal grants for research, program, and development activities.
Under the order, federal agencies must designate a senior presidential appointee to review all new funding opportunity announcements and discretionary awards. Until such processes are in place, agencies are prohibited from issuing new announcements without approval. Annual reviews of awards will also be required to ensure they remain consistent with agency and national priorities. This reform represents a shift from traditional reliance on program officers and peer review toward greater political oversight in federal grantmaking.
In addition, the Office of Management and Budget will revise federal grant regulations to streamline applications, limit the use of funds for facilities and administrative expenses, and expand agencies’ authority to terminate awards “for convenience.” These provisions heighten the compliance obligations and risks for recipients, as awards may now be terminated not solely for poor performance but also when priorities change. New restrictions on drawdowns will also require recipients to justify funding requests with greater specificity.
Impact on the Grant Process
Taken together, these reforms introduce greater uncertainty into the federal grants landscape. Organizations will need to carefully align proposals with administration priorities, prepare for expanded oversight, and account for new risks in both budgeting and performance. These changes enhance the importance of engaging with the administration to educate them on existing and potential grant funding opportunities. Additionally, the changes also increase the importance of engaging Congressional offices to weigh in with the administration.
*Lucas Adair is a senior advisor in Bradley's Governmental Affairs Practice Group. Lucas Adair is not an attorney.
