What Local Governments Should Know About the Proposed 2 CFR Part 200 Rewrite and the GSA SAM.gov Certification Changes

On May 29, 2026, the Office of Management and Budget published the most sweeping rewrite of the Uniform Guidance (2 CFR Part 200) since it was first established in 2013. The proposed rule is a joint rulemaking between OMB and every federal grantmaking agency, and it would convert what has largely functioned as guidance into a binding, government-wide regulation renamed the Uniform Grants Regulation (UGR). Public comments are due July 13, 2026. OMB's stated target is an October 1, 2026 effective date, the start of federal fiscal year 2027, though that remains the proposed timeline rather than a finalized one.

Provisions Most Relevant to Grants Administrators and City Leadership

Several provisions in the proposed rewrite are worth particular attention from grants administrators, finance directors, and city or county leadership.

1. 90-Day Suspension Authority (Proposed § 200.340(e))

The proposed rule would require every federal award to include a temporary suspension provision authorizing stop-work orders. Agencies would be able to temporarily suspend an active federal award for up to 90 days on a broad "in the interest of the agency" standard, extendable only by mutual agreement between the agency and the recipient. Pass-through entities would have parallel authority over their subawards. The written notice functions as a stop-work order, and the proposal does not establish a formal grantee appeal path. The 90 days can be enough to halt a construction season, delay a hiring cycle, or force a scope reset on a project already under contract.

2. Senior Political Appointee Pre-Issuance Review (Proposed § 200.205)

Each federal agency head would be required to designate one or more senior political appointees to conduct a pre-issuance review of every discretionary award. The appointee would assess whether the award "advances presidential and agency priorities." Peer review, previously the substantive gate on merit, is demoted to advisory only — the proposed rule directs that peer review recommendations "remain advisory" and not be "ministerially ratified [or] routinely deferred to" by the reviewing appointee. There is no formal appeal process for a technically strong application that does not clear this review, and no defined process for how the priorities test is evaluated. Timelines from application submission to award could stretch as review layers accumulate.

3. Tighter Subrecipient / Contractor Scrutiny

The proposed rule sharpens the distinction between subrecipients (who carry pass-through compliance obligations) and contractors (who do not). Transfers to affiliated or related entities that a jurisdiction might currently treat as internal allocations, joint operations, or contractor relationships may need closer review under the revised standard, and some are likely to be reclassified as subawards — bringing SAM.gov registration, subrecipient risk assessments, and ongoing monitoring obligations along with them.

4. At-Will Termination for Changed Federal Priorities (Proposed § 200.340)

Perhaps the largest operational shift for a local government grantee: the proposed rule expands termination authority so that a federal awarding agency can end an active award "if a Federal award no longer effectuates program goals, Federal agency priorities, or the national interest as they exist at the time of the termination." That is a materially different risk profile from what most jurisdictions have been managing — a multi-year federally funded project can now be terminated mid-performance based on shifting federal priorities, not just recipient compliance failures. OMB's discussion of the revisions to this provision spans 14 pages of the proposed rule.

5. Other Provisions to Flag

• DEI funding prohibition (Proposed § 200.300) — federal agencies and pass-through entities would be required to ensure federal awards are not used to "fund, promote, encourage, subsidize, or facilitate" DEI or DEIA policies that violate federal anti-discrimination laws. The same section also reaches "gender ideology" (as defined in Executive Order 14168) and gender-transition care for minors (Executive Order 14187). Affects program design and eligibility framing, not just paperwork.
• E-Verify (Proposed § 200.303) — E-Verify enrollment would be mandatory for every recipient employee and contractor on every federal grant.
• Restrictions on foreign collaborations — the proposed rule bars using federal funds to support certain collaborations with "foreign entities of concern" (defined to include China, Russia, Iran, and Cuba), unless statutorily authorized or approved by the agency head as being in the national interest and posing no national security risk. Foreign sub-awards, foreign collaborators, and even foreign visiting scientists on federally funded projects would require senior political appointee approval.
• Elimination of fixed-amount awards and fixed-amount subawards — eliminated except where federal statute specifically authorizes them. This is a mechanism many jurisdictions use for small, well-scoped pass-throughs.
• Terminology change — the "Uniform Guidance" would be renamed the "Uniform Grants Regulation" (UGR), and 2 CFR Subtitle A would be reclassified from "guidance" to a binding OMB regulation. Internal policies, templates, training materials, and audit responses that cite the old name will eventually need to be refreshed.

The GSA SAM.gov Certification Proposal

This rulemaking is not occurring in isolation. Earlier this year, the General Services Administration separately proposed updates to the Financial Assistance General Certifications and Representations that recipients complete in SAM.gov before they are even eligible for funds — a different front-end layer of the same compliance chain. GSA published its proposal on January 28, 2026, with comments closing March 30, 2026. The proposal adds three new certifications and revises one existing certification, covering:

• Unlawful discrimination in federally funded programs, including programs labeled as DEI or DEIA;
• Certain immigration-related conduct; and
• Funding or facilitation of violence, terrorism, or other illegal activities.

GSA estimated the changes would touch roughly 222,760 entities currently registered in SAM.gov for financial assistance. The two rulemakings ran on independent timelines, but they reflect the same broader shift toward stricter certification and documentation requirements for recipients at both the registration stage and the award-management stage.

What This Means for How Local Governments Run a Grants Program

Taken together, these changes mark a real shift in what running a grants program requires, compared to what has carried most local governments through the last decade.

For many teams, the answer to "what is the status of this grant" lives across a few places: a finance director's working knowledge, a department head's inbox, a shared drive folder. That arrangement has generally been adequate when the primary obligation was an annual report on a reasonably forgiving timeline.

The provisions above raise the stakes considerably. A 90-day stop-work order requires knowing financial exposure and contractor commitments on short notice. Subaward reclassification requires treating certain transfers as ongoing compliance items rather than something to reconcile at audit time. A political appointee review means the application package itself, not just the eventual compliance file, needs to be airtight at submission — there is no later opportunity to fix gaps once the award decision has been made. At-will termination for changed federal priorities means recipients need visibility into project status and financial exposure across every open award, not just the ones nearing a reporting deadline.

The underlying issue is less about effort and more about whether information is organized in a way that can keep pace with the requirements being proposed. As the regulatory environment for federal grants becomes more procedurally demanding, the gap between ad hoc tracking and a structured system of record is likely to become more consequential, not less.

How to Comment

Both proposals are still subject to change, and the comment process is the avenue for raising concerns about specific provisions. For the 2 CFR rewrite:

• Docket: OMB-2026-0034
• Deadline: July 13, 2026
• Where to submit: regulations.gov

Comments carry more weight when they cite specific proposed sections, describe concrete operational impacts on a specific program or jurisdiction, and propose alternative language. Trade associations serving local government — NACo, NLC, ICMA, GFOA — are actively organizing member positions and are useful channels for aligning a comment with broader sector concerns.

How Avila Can Help

Avila's platform is built around the idea that grant information should live in a structured system of record rather than across inboxes and folders. That matters more under a stricter compliance regime: award status, financial exposure, subrecipient monitoring, and reporting cadence should all be visible in one place so a 90-day stop-work order, a subaward reclassification, or a termination notice can be responded to quickly and accurately.

If you're a local government grants administrator, finance director, or city leader trying to figure out what these proposed changes mean for your programs, book a demo to see how Avila supports federal grant management under the current rules and the proposed ones.

This post is written for a local government audience and reflects publicly available information about the proposed rules as of July 2026. It is not legal advice. Consult counsel on how specific provisions may apply to your jurisdiction.