Key Takeaways

• The Office of Management and Budget (OMB) proposed sweeping revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards that, among other changes, would prohibit the use of federal funds to support DEI policies that violate federal anti-discrimination laws.
• The proposed rule introduces a broad discretionary termination provision, modeled after the FAR’s termination-for-convenience clause, that would allow agencies to terminate awards that no longer advance “agency priorities or the national interest.”
• New oversight measures include mandatory E-Verify participation, expanded conflict-of-interest disclosures, pre-issuance review criteria under which the government will evaluate applicants’ civil-rights compliance and foreign affiliations, and enhanced subaward reporting on SAM.gov.
• Comments are due 45 days after publication in the Federal Register July 13, 2026, with OMB targeting an ultimate effective date of October 1, 2026.
• Organizations receiving federal funding should continue to review DEI-related programs and policies, assess internal controls, and evaluate the impact of the expanded termination authority on current and future awards.