More Than a Funding Extension: What the Continuing Resolution Means for OMB’s Proposed Uniform Guidance Rewrite

On September 2, 2026, President Donald Trump signed the Continuing Resolution (CR) passed by Congress to fund the federal government through December 11, 2026. Although the legislation is primarily intended to prevent a government shutdown, it includes a significant provision for every organization that receives, administers, or audits federal awards: a temporary prohibition on finalizing or implementing the Office of Management and Budget’s proposed overhaul of the Uniform Guidance. 

Section 157 of the Continuing Appropriations Act, 2027, would prevent OMB from issuing or finalizing its May 29, 2026, proposed rule, Regulation for Federal Financial Assistance, or a “substantially similar rule” through December 11, 2026. If OMB were to finalize the rule before the legislation is enacted, the CR provides that the rule would have no force or effect through that date. 

The immediate effect is clear: OMB’s planned October 1, 2026 implementation date is blocked. The longer-term implications, however, are considerably less certain. 

The CR does not withdraw the proposed rule, permanently reject its provisions, or resolve the broader policy debate over federal grantmaking. Instead, it creates a temporary pause, and a critical period for federal agencies, recipients, pass-through entities, subrecipients, and auditors to prepare for several possible outcomes. 

Why the OMB Proposal Matters

On May 29, 2026, OMB published a proposed rule containing extensive revisions to 2 CFR Part 200 and other portions of Title 2 of the Code of Federal Regulations. OMB described the proposal as an effort to improve transparency, accountability, oversight, and consistency in the administration of federal financial assistance. 

The proposal is much more than a routine technical update. It would fundamentally alter the legal and operational framework for federal grants, cooperative agreements, and other forms of federal financial assistance. 

One of the most consequential changes would convert the Uniform Guidance into what OMB calls the “Uniform Grants Regulation.” Under the current framework, OMB issues government-wide guidance that federal agencies generally implement through their own regulations. Under the proposal, OMB’s requirements would operate as a binding government-wide regulation with a common effective date, without requiring separate agency rulemaking to implement each future revision. 

OMB maintains that this approach would produce greater consistency and eliminate duplicative agency rulemaking. Critics have questioned whether OMB has sufficient statutory authority to make all of 2 CFR Subtitle A directly binding on agencies and recipients in this manner. The proposal also would: 

• Require federal financial-assistance programs to align with administration policies and priorities, as well as their underlying statutory purposes. 
• Increase the role of senior political appointees in reviewing and approving certain federal awards. 
• Broaden the circumstances under which discretionary awards may be terminated when they no longer advance agency priorities or the national interest. 
• Establish new temporary suspension procedures for federal awards. 
• Eliminate fixed-amount awards and fixed-amount subawards unless expressly authorized by statute. 
• Add or expand requirements involving foreign organizations and international collaborations. 
• Establish policy-based restrictions addressing diversity, equity and inclusion, gender-related activities, and certain event services. 
• Expand the use of government-wide eligibility, payment-integrity, and transparency systems. 
• Revise requirements affecting pass-through entities, subrecipient oversight, procurement, cost allowability, and award administration. 

The proposal therefore affects not only federal agencies but also state and local governments, tribal governments, nonprofit organizations, colleges and universities, healthcare organizations, research institutions, and other entities that receive federal assistance directly or through pass-through arrangements. It also has significant implications for auditors performing single audits under Subpart F of the Uniform Guidance. 

OMB originally proposed making the final rule effective by October 1, 2026, so that one set of requirements would apply to awards issued during federal fiscal year 2027. OMB’s proposed rule⁠.

What Section 157 Actually Does

Section 157 provides that, through December 11, 2026, the proposed Uniform Guidance rule, or a substantially similar rule, “shall not be issued or finalized.” 

It also anticipates the possibility that OMB could finalize the rule before enactment. If that occurs, the CR states that the rule “shall not have force or take effect” through December 11. 

That language is broader than simply changing the proposed effective date. During the covered period, it prevents OMB from  issuing another rule that is substantially similar to the proposal or giving legal force or effect to such a rule if it were finalized before enactment. 

The restriction would become effective immediately upon enactment. Section 157 in the Congressional Record⁠.

This means recipients should not expect the proposed Uniform Grants Regulation to become applicable on October 1, as OMB originally planned. With the signing of the CR and Section 157 intact, the current Uniform Guidance framework remains in effect for all existing awards and any new or continuation awards issued during the extension period (i.e., at least through December 11th). 

What the CR Does Not Do

The pause is important, but it should not be interpreted too broadly.  

First, the CR does not permanently defeat the proposed rule. Unless Congress takes additional action, the statutory restriction expires on December 11, 2026. OMB could then finalize the proposal, issue a modified final rule, reopen portions of the proposal, or announce a new implementation schedule. 

Second, the CR does not require OMB to abandon the comments it received. OMB may continue reviewing public comments, evaluating alternatives, coordinating with federal agencies, and preparing a possible final rule, provided it does not issue or finalize the prohibited rule during the covered period. 

Third, the CR does not automatically suspend executive orders dealing with federal grantmaking. It also does not necessarily prevent agencies from using existing statutory authority, current regulations, funding-opportunity language, or award-specific terms and conditions to advance administration priorities. 

For example, the proposed rule would expressly expand discretionary termination authority. Delaying that rule prevents the proposed language from becoming government-wide regulation, but it does not  prevent an agency from exercising termination authority already contained in an existing award or otherwise permitted under current law. 

Similarly, the CR does not guarantee that grant competitions, renewals, or continuation awards will proceed on their original schedules. A continuing resolution generally limits agencies to funding activities at existing levels and taking only actions necessary to continue programs during the CR period. Some agencies may delay new competitions, issue shorter or incremental awards, postpone funding increases, or defer discretionary decisions until full-year appropriations are enacted. 

The pause in the Uniform Guidance rewrite and the continuation of federal funding are therefore related but separate issues. The first concerns which government-wide grant rules apply. The second concerns whether agencies have the appropriations and administrative flexibility to make particular awards. 

Existing Uniform Guidance Remains The Compliance Baseline

For recipients and subrecipients, the most important immediate message is straightforward: continue applying the existing Uniform Guidance and the terms and conditions of each award. Once the proposed rule goes final, existing awards will still be subject to whichever version of guidance was in place when they were made. 

Organizations should not revise their policies, procurement procedures, subrecipient-monitoring programs, cost-allocation practices, or audit preparation processes on the assumption that the May 29 proposal will take effect October 1. 

The proposed rule remains just that, a proposal. Its provisions are not current compliance requirements unless a similar obligation already exists under another law, regulation, executive order, agency requirement, or award term. 

Recipients should continue to identify the requirements applicable to each award based on: 

• The award’s date and terms and conditions; 
• The federal agency’s currently effective regulations; 
• The existing version of 2 CFR Part 200 incorporated into the award; 
• Applicable statutes and program regulations; 
• Agency-specific guidance; 
• The applicable Compliance Supplement; and 
• Any subsequent award amendments or agency instructions.

That said, organizations  should avoid treating the delay as a reason to stop preparing. Several proposed changes, particularly those involving termination risk, subrecipient oversight, foreign collaborations, documentation, and the legal status of the Uniform Guidance, could require significant operational changes if they eventually become final. 

Implications for Single Audits

The CR does not change the requirement to undergo a single audit or the existing audit threshold, nor does it directly amend Subpart F of 2 CFR Part 200. Auditors should continue performing single audits under the currently effective Uniform Guidance, the applicable annual Compliance Supplement, generally accepted government auditing standards, and the applicable auditing standards. 

The delay nevertheless has several practical audit implications. 

Applicable criteria must be identified carefully. Auditors should not use the proposed rule as audit criteria. A proposed requirement cannot support an audit finding unless the same requirement is independently established by a law, regulation, contract, grant agreement, or other authoritative award term. 

Award terms may continue to change. Federal agencies may amend notices of funding opportunity, award documents, certifications, or general terms and conditions based on executive orders or agency-specific authority. Auditors and recipients must therefore distinguish between the delayed government-wide rule and requirements that are already effective through another source. 

Compliance environments may become more complex. The delay may result in different requirements applying to different awards or agencies. If agencies act independently while the government-wide rule is paused, recipients may face a fragmented compliance environment—the very inconsistency OMB said its proposal was designed to reduce. 

Risk assessments should reflect uncertainty. Auditors should consider whether delayed awards, incremental funding, potential program cancellations, new award conditions, or uncertainty over future requirements create additional risks related to compliance, internal control, liquidity, going concern, commitments, contingencies, or subsequent events. 

What Federal award recipients should do now? 

The delay provides additional preparation time, but it is not a reason for inaction. Organizations should use the period through December 11 strategically. 

1. Continue complying with current requirements. Do not implement the proposed rule as though it were final. Maintain compliance with the version of Uniform Guidance in place at the time the award was made and all applicable award-specific requirements. 
2. Inventory awards and funding dependencies. Identify significant awards, expected renewals, pending applications, continuation funding, and programs that could be affected by a prolonged CR or delayed agency action. Organizations should understand which activities rely on new federal obligations after October 1. 
3. Evaluate cash-flow exposure. Assess whether delayed awards, incremental funding, or slower reimbursement could create liquidity pressures. Consider the organization’s ability to sustain payroll, subrecipient payments, contractual commitments, and program operations if federal funding decisions are postponed. 
4. Review termination and suspension provisions. Catalog the termination language in significant existing awards and subawards. Identify non-cancelable commitments, lease obligations, employment arrangements, contracts, and other costs that could continue after an award is suspended or terminated. 
5. Strengthen documentation. Organizations should ensure that programmatic decisions, costs, subrecipient monitoring, procurement actions, and performance results are well documented. Strong documentation remains one of the best protections in an uncertain compliance environment. 
6. Monitor agency-specific developments. Federal agencies may issue separate instructions addressing award timing, funding availability, executive-order implementation, or grant conditions. Recipients should assign responsibility for monitoring agency communications and evaluating whether those communications create binding requirements. 
7. Prepare for multiple outcomes.Organizations should consider at least three scenarios: 
   1. Congress extends the prohibition beyond December 11; 
   2. OMB finalizes a revised rule after the prohibition expires; or 
   3. OMB withdraws the proposal and begins a new rulemaking process. 

Policies, training, contracts, subaward agreements, and technology changes should be planned so they can be adapted once the direction becomes clearer. 

What happens after December 11?

The December 11 expiration creates a compressed and potentially consequential decision point. 

Congress could extend the restriction through another continuing resolution or include a longer prohibition in final FY 2027 appropriations legislation. It also could impose substantive limitations on particular provisions of the proposed rule. 

Alternatively, if Congress allows Section 157 to expire, OMB could move quickly to finalize the rule. However, OMB would need to establish a new effective date because the proposed October 1 date would have passed. A rule finalized in December also could create transition challenges for awards already issued during the first part of fiscal year 2027. 

OMB might instead make significant revisions in response to public comments and congressional concerns. If the final rule differs substantially from the proposal, additional notice and comment could be required, depending on the nature and extent of the changes. 

Litigation also remains possible. Questions involving OMB’s authority to convert the Uniform Guidance into a directly binding government-wide regulation, the scope of discretionary termination authority, statutory limits on executive control of appropriated funds, and the application of policy-based grant conditions could eventually be tested in court. 

A Pause, not a Resolution

The continuing resolution provides short-term clarity by preventing OMB’s proposed Uniform Guidance rewrite from taking effect on October 1. It does not, however, settle the future of federal grants administration. 

For now, existing Uniform Guidance requirements remain the primary compliance framework. At the same time, federal award recipients should prepare for continuing volatility in funding decisions, award conditions, and agency practices. 

The next several months should be treated as a period of active preparation. Organizations that understand their federal funding dependencies, maintain strong documentation, monitor agency-specific requirements, and prepare for multiple regulatory outcomes will be better positioned regardless of what happens after December 11. 

The CR gives the federal grants community more time. The value of that time will depend on how recipients, pass-through entities, and auditors use it.