On August 7, 2025, President Donald J. Trump issued an executive order titled “Improving Oversight of Federal Grantmaking” which directed agencies to reform federal grantmaking, including the Uniform Guidance in some significant ways.

Mandatory Inclusion of “Termination for Convenience” Provisions

• The EO directs the OMB Director to revise the Uniform Guidance to require that all discretionary grants permit termination for convenience, including when the award no longer furthers agency priorities or the national interest—subject to certain statutory exceptions
• Agencies are also required to amend existing grants, to the maximum extent allowed by law, to incorporate such termination clauses, and ensure that all future grants and amendments include these provisions

Limiting Facilities & Administrative (Indirect) Costs

• The EO directs OMB to revise the Uniform Guidance to limit use of discretionary grant funds for facilities and administrative (F&A) costs, reducing overhead allocations and emphasizing funding to direct project activities

Streamlining Application Requirements

• The EO calls for OMB to streamline application requirements within the Uniform Guidance, aiming to mitigate administrative burden and simplify Notices of Funding Opportunity (NOFOs)

Enhanced Controls Over Grant Drawdowns

Although not restructuring the guidance itself, the EO mandates that future discretionary grant terms prohibit direct drawdowns without explicit agency authorization, and require written, specific justification for each drawdown request.

To anyone receiving federal grants or servicing those grantees, this EO has some broad implications.  This shift significantly tightens political oversight of federal grants and introduces greater risk and uncertainty for long-term or politically sensitive projects.  Recipient institutions — especially those with higher indirect cost rates — may face financial and administrative challenges, including reduced overhead recoveries and stricter controls over funding access and will require greater planning in addressing costs and expenses should a termination occur.

In the interim, grantees should monitor OMB's website, agency grant policy offices, or the Federal Register for proposed and final rules; review all active discretionary grants for existing termination provisions and any reliance on indirect cost recovery; align your grant application templates, budget forms, and internal policies; ensure all project officers, subgrantees and financial teams understand the implications from a termination for convenience or failure to abide by any ideological/policy restrictions which now find their way into grants.

If you need help, feel free to reach out to RKW for assistance.