Sneak Preview: Stakeholders Balk at Termination, Award Section Directives in EO

(The following was excerpted from a recent Thompson Grants Compliance Expert article.) President Trump’s Aug. 7 executive order (EO) requiring more administrative review from agency heads prior to issuing awards, as well as allowing for federal agencies to terminate discretionary grants “for convenience,” is being widely criticized by grants stakeholders.

“This order opens the door for politics to override science, suggesting grants should be awarded or terminated based on subjective political judgments rather than scientific merit,” said David J. Skorton, MD, president and chief executive officer of the Association of American Medical Colleges (AAMC). “Such changes undermine the independent review and stable and predictable funding process that biomedical research requires to succeed.” Because the order also calls for limits to facilities and administrative (F&A) costs (i.e., indirect costs), AAMC fears this will severely hinder the ability of institutions to maintain an essential research infrastructure, run state-of-the-art research laboratories and comply with national security protections and patient safety protocols.

EO 14332, Improving Oversight of Federal Grantmaking, has both pre-award and post-award implications that aim to allow federal agencies to clamp down on selecting and overseeing discretionary awards that do not meet presidential priorities. EOs do not need the approval of Congress and are usually used to communicate large policy changes to be implemented by federal agencies. EOs do not have the same statutory authority as regulations, but they instruct federal agencies how to operationally or administratively undertake a policy change.

Addressing terminations, the EO calls on federal agency heads, within 30 days of implementation of the EO, to review the agency’s standard grant terms and conditions (T&Cs) and submit a report to the Office of Management and Budget (OMB) detailing:

• whether the T&Cs for discretionary awards permit termination for convenience and include the termination provisions at §200.340(a), including the provisions that an award may be terminated by the agency “if an award no longer effectuates the program goals or agency priorities” or, in the case of a partial termination by the recipient, if the agency “determines that the remaining portion of the federal award will not accomplish the purposes for which the federal award was made”;
• whether the agency’s T&Cs for discretionary foreign assistance awards permit termination based on the national interest; and
• the approximate number of active discretionary awards at the agency, as well as the approximate percentage of funding obligated under those awards that contain termination provisions allowing for termination as discussed in the first bullet point.

(The full version of this story has now been made available to all for a limited time here.)
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