The U.S. Office of Management and Budget (OMB) has proposed sweeping changes to the set of rules that govern how federal grants and other forms of federal financial assistance are administered—known as Uniform Guidance. Many of the proposed changes raise serious concerns about how cities will navigate federal programs now and in the future. OMB’s goals include increasing transparency, elevating existing guidance into formal regulation, and reducing the overall burden on federal grant administrators and grantees.
Act by July 13
Public comment on the rule is open through July 13, and OMB anticipates putting the new requirements into effect on October 1, 2026. GMA strongly urges every Georgia city to submit a comment. The analysis below explains what is at stake and why your response matters.
What’s at Stake for Local Governments
The wide-ranging proposal “Regulation for Federal Financial Assistance” would substantively change the Uniform Guidance by elevating and expanding the force of Executive Orders beyond federal agencies to individual grantees at the state and local level and increasing the number of administrative burdens on grantees.
Although the National League of Cities (NLC) and GMA support transparency and accountability measures, and advocates to simplify federal requirements on communities, points of view differ on whether this proposal would accomplish those aims overall. This includes outcomes that increase regulatory burdens and compliance costs to federal grantees, and could ultimately jeopardize access to federal funds with little or no recourse for impacted communities.
Increased Administrative Burden on Communities
Federal grants are already a major undertaking that require consistent attention from application to management to reporting outcomes and verification of compliance. OMB’s proposed changes would further increase these burdens without providing additional resources or funding. Adding new steps to the compliance and reimbursement process for federal grantees would be particularly troublesome for small, rural and under-resourced communities.
Changes sought by OMB include:
- Requiring all payment requests from municipalities to include written justifications describing the purpose of each payment and the specific award-related work it supports.
- Granting agencies the authority to add or remove specific conditions throughout the period of performance based on “risk factors” or “other factors” associated with a recipient or program, without providing specific guidance on what the ”risk factors” and “other factors” are.
- Requiring all recipients and subrecipients of federal financial assistance to participate in the Department of Homeland Security’s E-verify program for work associated with federal grants.
- Extending Buy America-style provisions beyond infrastructure to all federal awards regardless of domestic production capacity,
- Requiring states to run pre-payment checks through Treasury’s Do Not Pay (DNP) system before disbursing pass-through funds, which may delay access to funds for both local governments and residents.
- Discouraging cost-reimbursement contracts between grant recipients and their vendors or contractors (e.g. engineering firm, contractor). Local governments must submit a written justification if they want to use a cost-reimbursement contract.
The changes could, among other things, limit the authority of individual federal agencies to accommodate real differences between grantees, such as the Alternative Compliance Examination Engagement Report the U.S. Treasury granted small cities and towns that received ARPA State and Local Fiscal Recovery Fund grants.
Make Federal Funding More Uncertain and Unwieldy
OMB’s proposed changes would introduce additional uncertainty by allowing awards to be modified or terminated based on shifting Executive Branch priorities, even when recipients are meeting program objectives and have made significant local investments. Changes sought by OMB include:
- Allowing agencies to terminate a grant award during the period of performance if it is determined that the award no longer aligns with program goals or Executive Branch policies in effect at the time of termination.
- Preventing individual agencies from exercising discretion in grant compliance, or making reasonable accommodation for conditions not anticipated by statute
- Requiring pass-through entities to ensure their subrecipients do not take actions that could significantly damage the reputation of the pass-through entity, the federal agency making the award, or the federal government.
- If a subrecipient’s public statements are deemed “reputationally harmful,” the federal agency may direct the pass-through to terminate the subaward, or terminate the prime award to the pass-through entity entirely. This could impact how states disburse funds on a local level, and could significantly increase the regulatory burden of municipalities as pass-through funders.
- Eliminating fixed amount awards and subawards.
Risk of Politicizing Federal Grantmaking
Several provisions raise concerns that decisions could become more subjective or politically influenced rather than grounded in objective policy criteria.
Changes sought by OMB include:
- Allowing agencies to deny grants based on an applicant's "history of questionable practices," a term OMB leaves undefined, giving individual agencies and compliance officers broad, unchecked discretion to disqualify communities.
- Permitting agencies to enlist private individuals or outside organizations to pursue grant noncompliance claims, effectively allowing third parties with no official role to trigger compliance actions against your city.
- Requiring recipients to comply with Executive Orders that have not been enacted into law and may change during the life of a grant, leaving cities to manage shifting federal expectations with no guarantee of stability.
- Replacing career grant experts with political appointees in the final funding review stage. Under "pre-issuance review," political staff, not program specialists, would have final say over which proposals align with "the national interest."
- Requiring cities receiving federal funds to provide equal access to all viewpoints and political, ideological, or religious perspectives in any event or meeting space they operate, even when those activities receive no federal funding.
Proposals That May Benefit Communities
NLC and GMA supports the proposed provisions in the draft rule that would make it easier for municipalities to apply for and manage federal grants. These provisions include:
- Reinforcing the requirement that Notices of Funding Opportunities (NOFOs) should be written in “plain language.”
- Requiring that applicants apply for federal grants using Grants.gov unless a program-specific exception is expressly authorized.
- Encouraging agencies to use Statements of Interest (SOIs) as part of the application process when high application volume or lengthy proposals are expected.
- Requiring executive summaries (generally limited to 500 words) in NOFOs, with limited exceptions.
- Requiring NOFOs to be posted for at least 30 days.
- Encouraging agencies to strive to ensure that NOFOs are accessible to a broad range of applicants, including those that have not previously received federal awards.
Take Action
Before the July 13 comment deadline, GMA strongly urges you to submit a public comment describing how these changes would impact your community. You can also share your comments with your Member of Congress to build awareness ahead of the October 1 implementation date.
If your community has experienced a grant termination, even a temporary one, let NLC know by filling out this survey.
Reach out to GMA Federal Relations Manager Molly McLoughlin for further assistance and more information.