Executive Order 14332, “Improving Oversight of Federal Grantmaking,” was signed on August 7, 2025, and published in the Federal Register on August 12, 2025 (90 FR 38929, document 2025-15344). It is a presidential directive, not a regulation in itself: it orders the Office of Management and Budget (OMB) and individual federal grantmaking agencies to take specific actions affecting discretionary grants, several of which are still working their way through agency rulemaking and guidance more than a year later. This piece covers what the EO itself says and requires. For OMB’s subsequent proposed rewrite of the Uniform Guidance — a separate, later regulatory action — see CASRAI’s coverage of the OMB 2 CFR 200 rewrite’s current status.
What EO 14332 Actually Directs
The order’s substantive directives fall into four areas, based on the order’s text and the contemporaneous legal analysis summarized below.
Termination-for-Convenience Rights
The EO directs OMB to revise the Uniform Guidance (2 CFR Part 200) to require that all discretionary grants include a termination-for-convenience clause — letting an awarding agency end an award mid-performance when it decides the award no longer advances agency priorities or the national interest. Termination for convenience has long been standard in federal procurement contracts; applying it broadly to grants and cooperative agreements, which have traditionally been terminable only for cause (recipient noncompliance) or by mutual agreement, is a substantive change. The order also directs agencies to review their standard grant terms and conditions within 30 days and report to the OMB Director on whether existing terms permit convenience termination, and to revise the terms of already-issued discretionary awards to add or clarify convenience-termination rights “to the maximum extent permitted by law.”
Preference for Lower Indirect Cost Rates
The order directs OMB to “appropriately limit” the use of discretionary grant funds for facilities-and-administration (F&A) costs, and directs agencies to show preference for applicant institutions with lower negotiated indirect cost rates in competitive award decisions. That is a distinct mechanism from a flat rate cap: rather than capping every institution’s indirect cost recovery at a single number, it makes an institution’s negotiated rate a factor institutions are pushed to compete on. It follows, and is broader than, agency-specific indirect-cost actions earlier in 2025, including NIH’s short-lived attempt at a flat 15% cap on F&A rates for higher-education recipients (see CASRAI’s NIH indirect cost policy guide for that dispute’s own, separate timeline). Research administrators should not conflate the two: the EO’s “preference” language is a directive about award-decision criteria, not a rate cap in itself.
DEI- and Policy-Linked Award Restrictions
The EO instructs agencies to keep discretionary award funds from supporting activities involving “racial preferences or other forms of racial discrimination” or premised on denying the sex binary, and to avoid funding activities that subsidize illegal immigration or that the order characterizes as compromising public safety or promoting “anti-American values.” These are written as standing conditions to be built into discretionary award terms and conditions rather than one-time certifications, meaning they are the kind of clause research offices should expect to see appear directly in notices of award and standard terms documents as agencies implement the EO, not only in solicitation language.
Added Pre-Award Political Review
The order also directs agencies to establish a political-appointee review step in the discretionary award process, with no new funding opportunity announcements to issue until that review process is in place. The EO does not specify a fixed number of days for this element the way it does for the 30-day termination-clause review, so agencies’ implementation timelines vary; institutions should watch individual agency guidance rather than assume a uniform date.
EO 14332 vs. the OMB 2 CFR 200 Proposed Rewrite: Two Different Instruments
These are related but distinct actions in the same regulatory chain, and conflating them is a common source of confusion in institutional compliance memos:
- EO 14332 is a presidential executive order, issued August 7, 2025. It is a directive to OMB and agencies — it orders rulemaking and agency action but is not itself a rule institutions comply with directly, and it does not amend 2 CFR Part 200’s text.
- The OMB 2 CFR 200 proposed rule is OMB’s own subsequent rulemaking, published as a proposed rule on May 29, 2026 (docket OMB-2026-0034), with its public comment period closed July 13, 2026 and no final rule issued as of this writing. Several of the substantive changes that proposal describes — expanded termination authority, DEI-linked terms and conditions, added agency pre-issuance review — track closely with what EO 14332 directed OMB to do, which is consistent with (though this piece does not independently confirm line-by-line) the proposed rule functioning as OMB’s regulatory vehicle for implementing the EO’s mandate, alongside other inputs into that rulemaking.
In practice: EO 14332 explains why agencies started adding termination-for-convenience language and DEI-related conditions to individual discretionary awards well before any 2 CFR Part 200 text changed, since several of its directives (the 30-day agency review, revising existing award terms “to the maximum extent permitted by law”) did not wait for or require a completed rulemaking. The OMB proposed rule, if finalized, would be what makes analogous requirements binding, government-wide, through the regulation itself rather than through agency-by-agency implementation of a presidential directive.
Scope: Discretionary Grants Specifically
EO 14332’s directives are scoped to discretionary grants and cooperative agreements — awards where the funding agency has statutory discretion over whether and to whom to award funds, which covers the large majority of federal research grants (NIH, NSF, DOE Office of Science, and similar competitive research funding programs). The order does not, on its face, extend to mandatory/formula grant programs governed by separate statutory formulas.
Status and What Isn’t Settled
Because EO 14332 operates by directing agency and OMB action rather than by amending regulatory text on its own, its practical effect has rolled out unevenly: some directives (like the 30-day agency reporting requirement) had short, fixed deadlines and were actionable almost immediately; others (the political-appointee review step, and the indirect-cost “preference” language) depend on individual agency implementation that institutions should track agency-by-agency rather than assume is uniform or complete. Separately, agency-specific indirect-cost rate actions issued around the same period — including NIH’s since-contested 15% cap notice — have faced their own litigation and legislative pushback that is distinct from EO 14332 itself; treat that litigation history as relevant context, not as a ruling on the EO’s own provisions, which CASRAI has not found reported as separately and directly litigated to a final outcome as of this writing.
What Research Administrators Should Do Now
- Read new discretionary notices of award and standard terms and conditions for termination-for-convenience language and DEI-linked conditions rather than assuming award terms are unchanged from a prior year’s cycle with the same sponsor.
- Track your institution’s negotiated F&A rate relative to peer applicants where indirect-cost competitiveness has become a factor agencies say they weigh in discretionary award decisions — see CASRAI’s guide on how indirect costs (F&A) are calculated for the underlying mechanics.
- Route both this EO and the separate OMB 2 CFR 200 proposed rule to your institution’s grants and contracts office and general counsel — they raise related but legally distinct compliance questions and shouldn’t be handled as a single item.
- Watch individual agency guidance (NIH, NSF, and others) for how each is implementing the EO’s directives, since the order itself sets direction rather than uniform, self-executing rules.
For the broader compliance framework this sits inside, see CASRAI’s grants management and research funding coverage, and our guide to federal grant reporting requirements.
