Last Thursday, the Office of Management and Budget (OMB) released a series of sweeping proposed changes to the Uniform Grants Guidance (2 C.F.R. Part 200), that even encompass changing the name to Uniform Grants Regulation. Most of the proposed changes are intended to align the regulations – and execution of federal grants – with the President’s Executive Orders and the administration’s policies.
Many of the changes relate to the administration’s interpretation of civil rights laws. OMB proposes updating 200.300 to require federal agencies and pass-through entities to ensure awards do not “fund, promote, encourage, subsidize, or facilitate” diversity, equity, and inclusion (DEI), gender ideology, and “the so-called ‘transition’ of a child under 19 years of age from one sex to another.” The proposal includes nearly 24 pages outlining the administration’s authority to make these changes, despite acknowledging that many of its interpretations of federal civils rights laws are the subject of “ongoing litigation.” The proposal also includes a new section in 200.218, prohibiting federal grants from promoting or supporting “disparate impact liability” based on race, sex, or age. Federal agencies would review grantee eligibility before awards are made to ensure compliance with administration policies. Further, OMB proposed revising 200.206 to allow federal agencies to consider an applicant’s “affiliation with organizations engaged in activities that violate federal law, undermine public safety and national security, or advocate for the overthrow of the United States Government” without clearly defining how such violations will be determined. Similar language in other regulations has been challenged in court due to its subjective nature, with plaintiffs claiming that grantees could be subject to additional requirements because of affiliation with organizations that the current administration believes to promote DEI or gender ideology.
Other related changes include reducing the requirement to consider small or minority-, woman-, and veteran-owned businesses to only “small businesses.” OMB proposes adding a new section 200.219 to require that grantees not discriminate based on “viewpoint, content, or subject matter of speech.” This requirement would apply if the speech occurs on public entity property, even if an event is not supported by federal funds. The proposed changes would also require all grantees to participate in the E-verify program and confirm that all employees working on grants are lawfully in the United States.
The proposed rules also make significant changes to agencies' authority to terminate grants. The changes would alter 200.340 to allow agencies broader discretion to terminate grants. The proposal requires that this authority be included in all awards, and when agencies do terminate awards, they provide a brief summary of why the award or group of awards was terminated. OMB also proposes new requirements for pass-through entities to ensure that their subrecipients “do not take actions that could significantly damage the reputation of the pass-through entity, awarding Federal agency, or the Federal Government.” If a pass-through entity determines these actions are occurring, they are required to work with the federal agency to determine if the grant should be terminated.
OMB has also proposed changes to some of the selected items of cost. First, it recommends changing the cost of conferences to only being allowable if “expressly approved by the agency and included in the terms and conditions of the award.” Second, memberships and subscriptions would only be allowable to meet award requirements, and only with prior approval from the federal agency. Third, OMB proposes adding a section on abortions, clarifying that costs for elective abortions are unallowable.
Other changes include eliminating fixed amount subawards, removing section 200.323 which encourages the procurement of recovered materials, and deleting the requirement that the Compliance Supplement be updated annually. OMB states that it is currently reviewing how often the Compliance Supplement should be updated.
Comments are open for 45 days and can be submitted here.
The Bruman Group will be hosting a free webinar on the proposed changes for legislative clients on June 18that 1pm ET. Your team can register at this link. Note that because this webinar is exclusive to our legislative clients (another session of this webinar will be open to the general public), we ask that you not share the link externally. Registrants whose email domains do not belong to our legislative clients will be removed.
