Key Revisions in the OMB’s May 2026 Proposed Rule

The following provides a brief snapshot of some of the more important revisions in the Office of Management and Budget’s (OMB) May 29, 2026, proposed rule in 2 C.F.R. Part 200. Other changes were made in other sections of Title 2 (e.g., 2 C.F.R. Part 25, 2 C.F.R. Part 180, etc.), and within the agency regulations in subtitle B. More in-depth coverage on these proposed revisions is being covered in Thompson Grant news articles. Remember: these provisions are proposed and not yet finalized.

§200.202 — Program design and goals

• New language would require program goals and funding opportunities to explicitly align with President Trump’s policies and priorities, not just the statute and agency mission.
• Agencies could be directed to structure program goals around “administration policies and priorities,” which means notices of funding opportunities (NOFOs) may be re‑oriented away from field‑driven or expert‑driven priorities toward White House priorities.

For grantees: expect NOFOs to be written in more explicitly political terms, and to see program objectives framed in alignment with administration policy documents and executive orders.

§200.202(d) — Eligibility restrictions for nonprofits

• Agencies would be explicitly authorized to limit eligibility to certain IRS nonprofit categories (e.g., only 501(c)(3) entities), thereby excluding others such as 501(c)(4) advocacy groups.

For grantees: some advocacy‑oriented or hybrid organizations may find themselves categorically excluded from competitions where they were previously eligible.

§200.202(e), 200.220 — International and “domestic‑first” constraints

• Together, these provisions create a regime in which international collaboration is presumptively disfavored or restricted, particularly with “covered foreign countries,” and domestic‑only work is preferred.

For grantees: build proposals on domestic capacity and justify any foreign roles narrowly and explicitly; consider alternative nonfederal funding for international collaborations.

§200.204 — Notices of funding opportunities

• A new exception would allow agency heads (or designees) to bypass public posting on Grants.gov when public notice is deemed a risk to national security or “in the national interest of the U.S.”
• This goes beyond traditional classified programs by letting the agency run some competitions with limited or no public notice, based on a broad “national interest” determination.

For grantees: some competitions may occur by invitation or limited circulation only, making it harder for new or smaller organizations to find and access opportunities.

§200.205 — Federal awarding agency review of risk (pre‑award review)

This section is significantly reworked and highlights requirements under President Trump’s Executive Order 14322.

• Senior political appointees would be required to conduct a “pre‑issuance review” of every discretionary grant before award.
• The regulation would instruct that peer review recommendations are only advisory and may not be “ministerially ratified” or routinely treated as binding.
• Criteria for political review would include whether a proposed award is consistent with the president’s policy priorities and whether it involves topics identified in recent executive orders (e.g., gender ideology, illegal immigration, or activities characterized as “anti‑American values”).

For grantees:

• Peer‑review scores and panel rankings will no longer be the determinative factor even in research programs; political sign‑off can override them without a formal finding of technical deficiency.
• Applicants whose work touches on sensitive topics [gender, immigration, diversity, equity and inclusion (DEI), climate, etc.] face higher risk that projects will be screened out at the political review stage, regardless of peer‑review merit.

§200.205(d) — Peer review status

• The proposed text would codify that peer‑review recommendations “remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding.”

For grantees: high peer‑review scores are necessary but not sufficient; award decisions will explicitly hinge on political review and alignment with administration priorities.

§200.206 — Risk‑based considerations and affiliations

• Risk criteria would be broadened so agencies can deny awards based on an applicant’s “membership in or affiliation with” organizations deemed to advocate overthrow of the U.S. government or to undermine public safety/national security.
• The preamble’s broad framing of “anti‑American” or “extremist” activity, referencing a range of advocacy and DEI‑related work, suggests these terms could be interpreted expansively.

For grantees: affiliations with certain advocacy organizations or coalitions could be treated as a negative risk factor, even if the specific project is compliant and lawful.

§200.220 — International collaboration and “covered foreign countries”

• A new governmentwide prohibition would bar use of federal funds, including allocable indirect costs, for collaboration with “covered foreign countries” or their affiliated entities.
• This would apply to travel, joint research, technical assistance and any allocable indirect costs associated with such collaboration.

For grantees: any international partnership involving countries on sanctions or “covered” lists will be presumptively unallowable; even benign collaborations may need screening and approvals.

§200.300 — Statutory and national policy requirements (DEI and gender)

This section is used to attach cross‑cutting conditions to all awards.

• The proposed text would prohibit using federal funds to “fund, promote, encourage, subsidize, or facilitate” DEI or DEIA policies/practices, “gender ideology” (defined as theories denying a sex binary), and assistance with gender transition for individuals under 19.
• Because these are framed as general award conditions, they would apply across agencies and programs, not just to a handful of targeted grants.

For grantees:

• Activities explicitly labeled DEI, gender‑identity support or youth transition services could be treated as unallowable costs and grounds for enforcement or termination.
• Institutions conducting such work with non‑federal funds must ensure clear financial/firewall separation to reduce risk that agency reviewers argue federal awards indirectly “facilitate” prohibited activities.

§200.303 — Internal controls

• A new requirement would mandate that all recipients and subrecipients enroll in and use Department of Homeland Security E‑Verify for every employee and contractor working on a federal award.
• Recipients would have to report any final nonconfirmation to the awarding agency.
• Recipients would no longer be recommended to follow the Government Accountability Office Green Book or Treadway Commission principles for effective internal controls.

For grantees: HR and procurement systems will need to change; failure to implement E‑Verify correctly could become a compliance finding affecting all awards.

§200.340 — Termination

• The termination provision would be expanded to allow agencies to terminate grants “for convenience” whenever an award is deemed inconsistent with program goals or priorities, without a finding of noncompliance or fraud.
• This is explicitly analogized to termination‑for‑convenience clauses in procurement contracts, but applied to assistance awards.

For grantees: multi‑year projects could be ended midstream for policy reasons; risk management and contingency planning become more important, especially for personnel and long‑term commitments.

§200.421 — Advertising and public relations

• Public relations and outreach costs would be unallowable except where specifically mandated by statute.

For grantees: most communications to general audiences, media outreach, and public‑facing campaigns funded with grant dollars would be restricted unless clearly required by the program statute.

§200.432 — Conferences

• Conference attendance costs would be allowable only if explicitly approved by the federal agency and written into the terms and conditions of the award.
• There would no longer be a general presumption that scientific or professional conferences related to the project are allowable travel/training costs.

For grantees: every conference you plan to charge to the award may need to be named or clearly scoped at award time; adding new conferences later would require amendments and is not guaranteed.

§200.450 — “Issue advocacy” and related activities

• A new prohibition on “issue advocacy” would bar use of award funds for messaging that promotes or opposes a social, political or public‑policy position unrelated to the precise statutory objectives of the award, plus voter registration and certain state‑level lobbying.

For grantees: communications and policy‑oriented activities — especially on climate, equity, immigration or other controversial topics — may be scrutinized as potentially unallowable “issue advocacy,” even when based on project findings.

§200.454 — Memberships and subscriptions

• Professional society memberships would be allowable only if necessary to fulfill award requirements and pre‑approved in writing.
• Subscriptions to professional, academic and technical journals would become categorically unallowable as direct costs.

For grantees: expect to fund most memberships and journal access from institutional or nonfederal sources; award‑charged memberships will be rare and heavily justified.

§200.461 — Publication and open‑access costs

• Publication costs — including page charges, article processing charges, and open‑access fees — would be presumptively unallowable, unless a statute specifically requires them or the agency grants case‑by‑case approval.

For grantees: you will need alternative funding sources (institutional, foundation, or APC‑free venues) to publish results; relying on federal project budgets for publication will be difficult.

Cross‑cutting structural change — OMB as binding regulator

• Across part 200, conforming language and the preamble reiterate that 2 C.F.R. subtitle A is an OMB “regulation” issued under statutory authority (31 U.S.C. 503, 6307, etc.), intended to bind all agencies on a common schedule.
• Agencies’ own parts in subtitle B, are updated largely as cross‑references and adoptions, not independent policy layers.

For grantees: most substantive policy will live in 2 C.F.R. part 200 itself; agency‑specific flexibilities or carve‑outs may become narrower and more difficult to obtain.