Proposed “Uniform Grants Regulation” Raises New Risks for International Programs and Collaborations
- Alan Grose and Tami Hemingway, XL Law Consulting
- Jul 17
- 4 min read
A new NPRM from the Office of Management and Budget (OMB) would significantly reshape federal discretionary grantmaking and allow expanded discretion for the administration to affect its priorities throughout the grantmaking lifecycle.
Institutions with programs or collaborations involving China or other countries of concern should assess the potential impact of the proposed regulations now.
On May 29, 2026, the Office of Management and Budget (OMB) published a notice of proposed rulemaking (NPRM) titled “Government-Wide Regulation for Federal Financial Assistance,” 91 Fed. Reg. 32198 (May 29, 2026) that would reshape OMB Guidance for Federal Financial Assistance (“Uniform Guidance”) located in title 2 of the Code of Federal Regulations (CFR), subtitle A. The proposed changes would shift discretion throughout the federal grantmaking lifecycle from the federal agencies themselves to the OMB and senior agency appointees, thereby allowing OMB and politically appointed officials expanded authority to give effect to the administration’s priorities, including with respect to agreements and collaborations with China or other countries of concern.
New "Uniform Grants Regulation” Framework
In place of OMB’s current system of “Uniform Guidance,” the proposed rule would introduce a new “Uniform Grants Regulation” that provides for political oversight over pre-award review and greater on-going discretion to suspend or terminate awards.
Mandatory Senior Appointee Review. §200.205 would require all discretionary awards to undergo a pre-issuance merit review conducted by senior appointees or their designee according to written standards. Those standards must include, where relevant, advancement of the administration’s policy priorities; non-promotion of “racial preferences or other forms of racial discrimination,” denial of “the sex binary in humans,” “illegal immigration,” “any initiatives that compromise public safety or promote anti-American values;” all else being equal, lower indirect cost rates, among others. Peer review would become advisory and not de facto binding.
Discretionary Suspension and Termination. §200.340 would allow for the termination of federal awards “if the Federal agency or pass-through entity determines that a termination is in the interest of the Federal agency or pass-through entity, including if a Federal award does not effectuate program goals, Federal agency priorities, or the national interest as they exist at the time of the termination.
Within this framework, two specific provisions could prove especially impactful for IHEs with international programs or collaborations that involve China or other countries of concern.
New Prohibition of Using Federal Funds for Covered Foreign Collaborations
The NPRM proposes a new §200.220 “Prohibition of using Federal funds for covered foreign collaborations” that would prohibit use of federal funds by a recipient or subrecipient “to support a bilateral or multilateral collaboration, agreement, program, or activity with a covered foreign country or covered foreign entity,” unless an exception is “expressly authorized by Federal statute or the Federal agency head (or designee) determines that the activity does not pose a risk to national security and is in the national interest of the United States.” Moreover, this prohibition on collaborations applies broadly to direct programmatic activities, research, technical assistance, travel, and indirect costs allocable to such collaborations, which the preamble to the NPRM is to ensure the prohibition is not “circumvented through the structure of funding mechanism or cost allocation practices.”
While the structure of this prohibition parallels that of the Wolf Amendment, which prohibits NASA funds from being used in bilateral activities that involve in any way China or a Chinese-owned company (including Chinese universities) unless otherwise expressly authorized, the proposed prohibition includes multilateral activities and applies across all federal agencies. The definitions of “covered foreign countries” and “covered foreign entities” are broad in scope:
Covered Foreign Countries: “means any country designated by statute, Executive order, or other Federal law as: (i) a foreign adversary; (ii) a country of particular concern; or (iii) a country subject to sanctions or restrictions relating to national security, defense, or intelligence activities.
Covered Foreign Entities: “means (i) an entity owned or controlled by, or acting on behalf of, a covered foreign country; (ii) an entity identified as an "entity of particular concern" on a list maintained by a Federal agency pursuant to statute (including lists maintained under a National Defense Authorization Act or the International Emergency Economic Powers Act); or (iii) an entity affiliated with the military, intelligence, or security services of a covered foreign country.”
To illustrate this breadth in scope, the referenced Federal agency lists of entities of concern would include restricted party lists maintained under export control and economic sanctions regulations, as well as the Department of War’s (DoW) 1260H List of companies that contribute to China’s Military-Civil Fusion strategy and its 1286 List of institutions, including many Chinese universities, deemed to engage in problematic talent recruitment programs. The Uniform Grants Regulation would presumptively prohibit an IHE from using federal funds to engage in any activity with a listed entity without the prior express authorization of the agency head.
Expanded Pre-award Risk Assessments
While the current Uniform Guidance requires agencies to conduct a pre-award assessment of risks posed by applicants, the NPRM’s proposed §200.206(b)(2) proposes to expand the list of areas for review to include “membership in or affiliation with organizations engaged in activities that violate Federal law, undermine public safety or national security” and, where applicable, “the applicant’s compliance with foreign gift and contract disclosure requirements under section 117 of the Higher Education Act of 1965.”
Implications for IHEs
OMB has set an ambitious timeline for this proposed new regulation. Comments were due on July 13, 2026, and the final rule is expected by October 1, 2026, which would result in application of the Uniform Grants Regulation to all federal awards made during fiscal year 2027.
Though OMB might revise the final regulation based on feedback it receives through the notice and comment process, institutions with programs or collaborations involving China or other countries of concern should take the following steps now to assess the potential impact of the final rule.
Evaluate the institution’s overall dependence on federal discretionary awards.
If the institution does engage in any collaborations or activities involving listed entities, ensure clear accounting and separation of federal and non-federal funding.
Identify any grant-funded activities that would receive new scrutiny or candidates for suspension or termination under the proposed rule.
Identify any potential compliance gaps in section 117 reporting that might present hurdles during expanded pre-award risk assessments for new grant applications and invest in section 117 compliance capacity accordingly.
