An August 7, 2025, Executive Order (EO) may have significant impact on organizations that seek discretionary federal grants to fund projects or provide services. Improving Oversight of Federal Grantmaking includes direction relevant to both future and existing grants.

First, the EO seeks to establish greater accountability of agencies awarding discretionary grants. It does so by requiring each agency with grant authority to appoint a senior appointee who is to create a new grant award process that ensures notices of funding opportunities and grant awards are consistent with the agency's priorities and national interest. Until the new process is created, no new funding opportunity notices will be issued without the senior appointee's (or designee's) approval.

The new process must include, at a minimum:

1. Review and approval of all grant opportunities by the senior appointee or designee.
2. Review by a designated subject matter expert of the grant's subject matter.
3. Requirements written in plain English that do not require technical or legal expertise to draft an application.
4. Coordination with other agencies to avoid duplicative grant opportunities.
5. Review by the senior appointee or designee with assistance from grant review panels or program offices of opportunities before being issued for consistency with agency priorities and the national interest.

Additionally, the EO provides that grant award decisions are to:

1. Be the result of the independent judgment of the senior appointee.
2. Demonstrably advance the President's policy priorities.
3. Not fund, promote, or facilitate racial preferences, applicants who say that sex is a chosen characteristic, illegal immigration, or other initiatives that compromise public safety or promote anti-American values.
4. Give preference to applicants with lower indirect cost rates, all else being equal.
5. Ensure applicants commit to complying with administration policies, procedures, and guidance respecting Gold Standard Science. (EO, Restoring Gold Standard Science, was issued on May 23, 2025.)

The EO also requires revision to the Uniform Guidance in 2 C.F.R. Part 200. Specifically, the Uniform Guidance is to clarify and require discretionary grants to permit termination for convenience when the award no longer advances agency priorities or the national interest. Furthermore, the Uniform Guidance will be revised to limit the use of grant funds for facilities and administration costs.

Applicants should expect future grants to have terms and conditions that prohibit recipients from directly drawing down grant funds without affirmative agency authorization. Future grants also will require recipients to provide written justification in support of requests for draw downs.

As for existing grants, the EO provides that agencies shall review whether they include a termination for convenience provision that allows termination if the grant no longer effectuates the program goals or agency priorities or is no longer in the national interest. Agencies are to report this information to the Office of Management and Budget within 30 days, and also revise such grants to incorporate such a termination for convenience provision.

As a result of this EO, organizations that seek federal grants should expect some uncertainty for the foreseeable future. When the dust settles, the discretionary federal grant program will no doubt see changes to grant subject matter, the structure to notices of funding opportunities, the review process for grant applications, and grant terms and conditions.

In the meantime, grant seekers should consider the following to be better prepared:

1. Incorporate language into their proposals to show consistency with the administration's policies and priorities, when possible. Doing so will be relevant both to winning grants and also possibly keeping them.
2. Develop a plan of what to do should a grant be terminated for convenience because administration priorities change.
3. Review indirect cost rates. Applicants who previously negotiated indirect cost rates or relied on the de minimis 15 percent rate under the Uniform Guidance may need to look at their accounting practices to possibly lower such rates in light of the guidance to give preference to lower indirect cost rates.
4. Review how limiting use of grant funds for facilities and administration costs may impact their organization.
5. Review the Gold Standard Science guidance if they pursue science grants.

These are just some of the changes to consider preparing for. There are others. For further help understanding how this recent EO may impact your organization's pursuit of federal grants, please contact Wilson Sonsini's Government Contracts attorneys.