Stakeholders Balk at Termination, Award Section Directives in EO

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.

Terminations

Under the order, no new funding opportunities may be announced until agencies implement procedures empowering designated officials to approve, freeze, or terminate grants at any time. 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 administration has already terminated thousands of research grants that were deemed as not meeting the president’s priorities. Associations have taken these terminations to court, and while certain funding agencies have used the rationale that the award “no longer effectuates the program goals or agency priorities” in these terminations, judges have deemed the terminations as “arbitrary and capricious” and the federal authority to terminate the awards for this reason has not been upheld in these litigation challenges.

The EO then calls on agency heads, to the maximum extent permitted by law and consistent with relevant EOs and other presidential directives, to take steps to revise the T&Cs of existing discretionary grants to permit immediate termination for convenience, or clarify that such termination is permitted, including if the award no longer advances agency priorities or the national interest. Agencies must ensure that such terms are included when awarding and making amendments to future discretionary grants, and take steps to revise all applicable regulations binding on or incorporated in discretionary grant T&Cs to require such terms.

Some grant attorneys said this provision could be problematic, as such amendments to awards should be mutually agreeable to by both parties, and a grantee would likely reject such changes. However, the EO may enable agencies to exert pressure on grantees to accept this change as a condition of a renewal or extension of an award and subsequent year funding.

Also to the extent practicable and consistent with applicable law, the EO directs agency heads to include in the T&Cs of future discretionary grant agreements provisions that (1) prohibit recipients from directly drawing down general grant funds for specific projects without the affirmative authorization of the agency; and (2) require grantees to provide written explanations or support, with specificity, for requests for each drawdown. Such requirements could hamper the draw down process, and potentially cause significant cash flow issues for grantees that operate with limited capital means.

Uniform Guidance

The EO directs OMB to revise the uniform guidance (2 C.F.R. Part 200) and other relevant guidance to streamline application requirements and to further clarify and require all discretionary grants to permit termination for convenience, including when the award no longer advances agency priorities or the national interest, but subject to appropriate exceptions, including those to support international trade agreements or those awarded by the Department of Commerce under title XCIX of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Pub. L 116-283), the CHIPS Act of 2022 (Pub. L. 117-167), or division F of the Infrastructure Investment and Jobs Act (Pub. L. 117-58).

Because the EO contends that “a substantial portion of many federal grants for university-led research goes not to scientific project applicants or groundbreaking research, but to university F&A costs,” it also directs OMB to further revise the uniform guidance and other relevant guidance to appropriately limit the use of discretionary grant funds for costs related to F&A costs. Federal sources have stated that OMB will release proposed revisions to the uniform guidance later this year (see “OMB Expects To Issue More Revisions To Further Streamline 2 C.F.R. 200,” August 2025), and changes to indirect cost provisions are anticipated.

COGR, which represents numerous research universities, seriously opposes any efforts to limit F&A costs. “This is an unambiguous message — the administration refuses to acknowledge and pay for the true costs of research critical to the security of the nation and the health of its people,” said COGR President Matt Owens. F&A costs “have been capped since 1991, and this order aims to cap reimbursement for these costs further. Similar rate caps and payment freezes imposed by this administration are now the subject of multiple lawsuits and would cripple American science and innovation if implemented. This irresponsible order severely harms federal research grantmaking as our nation seeks to preserve its global leadership position. We urge the administration to reverse course on this order and other harmful actions it has taken that sacrifice America’s competitive advantage in science and innovation.”

Pre-award Review Process

The White House, in the EO, states that writing effective grant applications “is notoriously complex, and grant applicants that can afford legal and technical experts are more likely to receive funds,” adding that these funds may not necessarily be used to support functions deemed essential to the award’s mission. In addition, “there is insufficient interagency coordination and review by relevant subject matter experts to reduce duplication. As a result, the best proposals do not always receive funding, and there is too much unfocused research of marginal social utility.”

Therefore, the EO directs agency heads to designate a senior political appointee to create a review process for new notices of funding opportunity (NOFOs) and to review discretionary grants to ensure that they are consistent with agency priorities and the national interest. The level of review was not specified in the EO, but it should require at a minimum: (1) review and approval of agency NOFOs by one or more senior appointees or their designees; (2) continuation of existing coordination with OMB; (3) if appropriate to the subject matter, a review by designated subject-matter experts as identified by each agency; (4) a review of NOFOs and related forms to ensure that they include only such requirements as are necessary for an adequate evaluation of the application and are written in plain language to minimize the need for legal or technical expertise in drafting an application; (5) interagency coordination to determine whether the subject matter of a particular NOFO has already been addressed by another agency announcement to avoid redundancy; (6) for scientific research discretionary grants, review by at least one subject matter expert in the field of the application, who may be a member of the grant review panel, the program officer or an outside expert; and (7) pre-issuance review of discretionary awards to ensure that the awards are consistent with applicable law, agency priorities and the national interest, which shall involve in-person or virtual discussion of applications by grant review panels or program offices with a senior appointee or that appointee’s designee.

The EO goes on to call for agency heads to designate one or more senior appointees to review discretionary awards on an annual basis for consistency with agency priorities and substantial progress. This review should include “an accountability mechanism” for officials responsible for selecting and granting the awards. The EO also states that agencies should not issue any new NOFO until it is approved by the new senior appointee under the new NOFO review process established under the EO, which potentially could stymie the availability of current award announcements even further.

Award Selection

The EO establishes numerous requirements that fall in line with the Trump administration’s priorities when selecting recipients of discretionary awards. It states that NOFOs for discretionary awards, where applicable, must demonstrably advance the president’s policy priorities and shall not be used to fund, promote, encourage, subsidize or facilitate:

• racial preferences or other forms of racial discrimination, including activities where race or intentional proxies for race will be used as a selection criterion for employment or program participation;

• denial by the grant recipient of the sex binary in humans or advance the notion that sex is a chosen or mutable characteristic;
• illegal immigration; or
• any other initiative that compromises public safety or promotes anti-American values.

In a directive of particular concern to associations like AAMC, the EO states that federal agencies, in cases where applicant proposals are equal, should give preference for discretionary awards to institutions with lower indirect cost rates. It also notes that discretionary grants should be given to a broad range of recipients rather than to a select group of repeat players, adding that research grants should be awarded “to a mix of recipients likely to produce immediately demonstrable results and recipients with the potential for potentially longer-term, breakthrough results, in a manner consistent with the funding opportunity announcement.”

The EO further calls for: (1) applicants to commit to complying with administration policies, procedures and guidance respecting the administration’s Gold Standard Science (see “OSTP Issues Standards for Research Guidance”) (2) agencies to include clear benchmarks for measuring success and progress towards relevant goals and, particularly for awards pertaining to scientific research, a commitment to achieving Gold Standard Science; and (3) to the extent institutional affiliation is considered in making discretionary awards, agencies should prioritize an institution’s “commitment to rigorous, reproducible scholarship over its historical reputation or perceived prestige.” As to science grants, agencies should prioritize institutions that have demonstrated success in implementing Gold Standard Science.

While the EO notes that it does not discourage or prevent the use of peer review methods to evaluate proposals for discretionary awards or otherwise inform agency decisionmaking, the peer review recommendations “should remain advisory and should not [be] ministerially ratified, routinely deferred to or otherwise treated as de facto binding by senior appointees or their designees.”

The EO’s award selection process sparked the ire of certain members of Congress. “This executive order is nothing short of obscene,” said Rep. Zoe Lofgren (D-CA). “In what world does Donald Trump think that Americans want political appointees — who, need I remind the president, are unelected bureaucrats — making decisions on what science gets funded? This means someone who has made millions lobbying for chemical companies could block research into the dangers of pesticides, polyfluoroalkyls (PFAS), microplastics — the list goes on. This is wrong. Americans will pay the price. We must not accept this corruption as our new normal.”

Some legal experts anticipate litigation to attempt to halt some of the directives in the EO, which could delay their implementation.

For More Information

A link to the executive order on grants oversight, as well as other Trump Administration EO’s, is available at https://www.thompsongrants.com/news/trump-administration-actions-affecting-grants.