The Quiet Rule that Could Reshape Federal Research Funding

At the end of May, the Office of Management and Budget released a sweeping proposed rule with remarkably little fanfare. If finalized, it would codify directives from recent executive orders and fundamentally change how federal research grants are selected, distributed, and administered.

Here are some of the directives under the proposed rule:

Political Pre-Issuance Review of All Discretionary Awards: Under the proposed rule, agency heads must designate one or more senior political appointees to review and approve every discretionary grant before it is awarded. Appointees are expressly instructed to use independent judgment and are forbidden from routinely deferring to scientific peer reviewers.

Expanded Grant Termination Authority: Agencies would gain authority to terminate or suspend active discretionary awards at any time if a grant no longer aligns with agency interest, program goals, or national interest.

Cross-Cutting Prohibitions Embedded in All Awards: All federal awards would be required to include prohibitions on DEI-related activities, "gender ideology," disparate-impact liability theories, and collaboration with designated foreign entities, regardless of the scientific nature of the project.

Prohibition on Federally Funded Foreign Collaborations: The proposed rule would bar recipients and subrecipients from using any federal funds, including indirect costs, to support collaborations with "covered foreign countries" or "covered foreign entities.”

Preference for Institutions with Lower Indirect Cost Rates: Agencies would be directed to favor applicants with lower indirect cost (IDC) rates in award selection, potentially disadvantaging research universities that host significant plant science programs.

Federal research dollars touch virtually every sector: cancer research, plant disease, animal health, food security, and beyond. There isn’t a single person who isn’t impacted in some way by the federal research dollars that have been distributed to academia and nonprofits over the last few decades. Industry relies on these dollars to partner with academia or build on research for patents to use in their sector.

Whatever the final rule looks like, it’s clear that the federal research funding landscape will significantly change. What’s notable is how little Congress has said about the proposed rule. With OMB racing to implement the final rule by October, this could lead to Congress needing to speak up when the impacts are felt.