The government is updating the regulations that govern federal expenditures through grants, cooperative agreements, loans, loan guarantees and certain other types of assistance.
Once effective, the pre-publication final rule announced earlier this month will affect more than $1.2 trillion in annual funding for thousands of federal programs.
The most substantial revision to the Uniform Grants Guidance since it went into effect on December 26, 2013, revisions include simplifying language, clarifying requirements and reducing regulatory burdens.

On April 4, 2024, the White House released a pre-publication final rule substantially updating the Office of Management and Budget (OMB) Uniform Grants Guidance, which sets the foundational requirements for agencies in making grants and providing other forms of federal financial assistance and will now be known as the “Guidance for Federal Financial Assistance.” Federal financial assistance includes grants, cooperative agreements (but not cooperative research and development agreements), loans and loan guarantees, subsidies, insurance and certain other types of assistance. This pre-publication final rule will be published in the Federal Register and builds on the proposed rule published in the Federal Register on October 5, 2023. This final rule is the most significant revision to the Uniform Grants Guidance since its inception 10 years ago.

The federal government spends over $1.2 trillion each year through grants and other financial assistance programs. This figure actually dwarfs federal procurement spending, which has ranged from $655 billion to $694 billion annually over the past three years. Accordingly, this final rule will affect substantially more federal spending than would a revision to the Federal Acquisition Regulation.

The final rule incorporates statutory requirements and administration priorities, reduces certain agency and recipient burdens, clarifies areas where recipients or agencies have interpreted requirements in different ways, and rewrites sections in what OMB describes as “plain language” to improve flow and address inconsistent use of terms. The final rule explains that these “revisions are intended to improve federal financial assistance management, transparency and oversight through more accessible and easily understandable guidance.”

One way the final rule seeks to reduce regulatory burdens is by increasing several thresholds. Specifically, the final rule:

  • increases from $750,000 to $1,000,000 the level at which a recipient is required to conduct a single audit or a program-specific audit;
  • increases from 10% to 15% the de minimis indirect costs rate that recipients may apply without negotiating an alternative rate with the relevant federal agency;
  • increases from $25,000 to $50,000 the amount of subawards that recipients can apply to their indirect rate;
  • increases the value threshold from $5,000 to $10,000 for recipients to be required to sell unused supplies at the end of the grant award period; and
  • increases from $5,000 to $10,000 the value of equipment that at the end of the grant period “may be retained, sold, or otherwise disposed of with no further responsibility to the federal agency.”

One way the guidance seeks to increase accessibility of grant announcements is by requiring agencies to simplify Notices of Funding Opportunities (NOFO) to make it easier for lay people and smaller organizations to apply for federal funding.

Clarifying language has also been added throughout the final rule to help readers understand what obligations apply to them. For example, where feasible, OMB generally replaced the term “non-federal entity” with “recipient,” “subrecipient” or both, because people reported difficulty understanding which entities were being addressed.

In an effort to expand access to federal funding, the final rule removes prohibitions on state, local or Tribal geographical preferences, and clarifies that the rule “does not prohibit recipients or subrecipients from developing written procedures for procurement transactions that incorporate a scoring mechanism that rewards bidders who commit to specific numbers and types of U.S. jobs, minimum compensation, benefits, on-the-job-training for employees making work products or providing services on a contract, and other worker protections.”

The final rule also includes numerous revisions clarifying obligations recipients have when making subawards or entering into contracts. For example, the rule clarifies that such agreements must only be entered into with responsible parties. Additionally, the rule clarifies that the recipient or subrecipient must perform a cost-benefit or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold.

The final rule also updates regulations to address matters such as requirements to obtain unique entity identifiers (UEIs) and to register in the System for Award Management (SAM.gov). For example, it clarifies that second-tier subrecipients and contractors under grants do not need to obtain a UEI and permits agencies to exempt foreign organizations and foreign public entities from completing a full SAM.gov registration for awards under $500,000.

The revisions take effect October 1, 2024, but agencies are authorized to implement the revisions sooner for NOFOs issued 60 days after the Final Rule’s publication in the Federal Register.

These and any accompanying materials are not legal advice, are not a complete summary of the subject matter, and are subject to the terms of use found at: https://www.pillsburylaw.com/en/terms-of-use.html. We recommend that you obtain separate legal advice.