A newly proposed federal regulation could affect how research grants are awarded to small businesses and other recipients. This article outlines the proposed changes and explains how members of the public can submit comments. The comment period is open through July 13, 2026.
The proposed regulation would require all grant & contract awarding agencies to obtain approval of political appointees prior to issuing an award. This would reverse a policy that has been in place since World War II that allows scientific reviewers at agencies to determine which projects are most meritorious and would instead, put funding decisions into the hands of political appointees of the executive branch who may not have appropriate science backgrounds to understand the proposed research.
The proposed regulation justifies this change as a mechanism to advance the President’s policy priorities in science and to eliminate awards that fund any of the following:
- Racial preferences or other forms of racial discrimination by the recipient;
- Denial by the recipient of the sex binary in humans or the notion that sex is a chosen or mutable characteristic;
- Illegal immigration; or
- Any other initiatives that compromise public safety or promote anti-American values. It should be noted that anti-American values are not defined by this proposed rule, and this language does not appear elsewhere in the regulatory scheme.
- All things being equal, preference for discretionary awards would be given to institutions with lower indirect cost rates under this new rule.
The proposed regulation also eliminates all fixed amount awards and would require grant/contract recipients to provide justification for each payment drawdown on their awards, potentially increasing the paperwork required for each one. The complete text of this proposed regulation is available here: 2026-10817.pdf. Because the full text of this regulation exceeds 400 pages, I recommend having an AI summarize it for you. You can then identify sections of interest and read them independently.
This proposed regulation is now open for public commentary. The public is allowed to comment on the proposal until July 13, 2026. To comment on the proposal, go to Regulations.gov and click on the Comment button at the top of the page. To provide clarity as to which section you are commenting on, please use the following method:
- Identify the specific section you wish to address in your comment. For reference, the items noted in this blog are located in the following sections:
- §200.205: Political appointees to review grants prior to award
- §200.201: Elimination of fixed amount awards
- §200.305: Requirement that recipients provide justification for each drawdown
- §200.333: Elimination of fixed amount subawards
- Predicate your comment with the relevant section in brackets. Thus, to comment on the elimination of fixed amount subawards, begin your comment with [200.333] or reference that section somewhere in your comment.
- Note that you may make comments anonymously if you so choose.
This regulation is a response to Executive Order 14332, signed by the President on August 7, 2025 (full text here: Improving Oversight of Federal Grantmaking – The White House). Key Provisions of the Executive Order include the following:
- Agency Oversight and Senior Appointees: Each federal agency must designate a senior official responsible for reviewing discretionary grants and funding announcements to ensure alignment with agency priorities and the national interest.
- Grant Termination Clauses: Agencies are required to revise discretionary grant terms to allow termination for convenience, including if a grant no longer advances agency priorities or the national interest. This applies to both domestic and foreign discretionary awards.
- Reporting Requirements: Agency heads must report to the Office of Management and Budget (OMB) within 30 days, detailing the number of active discretionary awards and whether they include termination provisions.
- Funding Restrictions: The order states that discretionary grants should not be awarded to organizations that promote racial preferences, support non-binary or transgender programs, or provide services to undocumented immigrants, and frames these restrictions as part of a broader federal oversight policy.
- Gold Standard Science Protocol: Grants must adhere to a new scientific protocol emphasizing reproducibility, transparency, peer review, and unbiased research, ensuring federally funded projects meet rigorous standards.
Note that this regulation may or may not apply to SBIR/STTR grants or contracts, but these grants or contracts are not explicitly excluded from this new oversight. Additionally, agencies have not put forth any guidance as of yet as to how this affects their grants or contracts, probably because the regulation has not been implemented yet.
Interested persons can respond to this proposal by commenting on it before July 13, 2026 at Regulations.gov.
