In an effort to ameliorate perceived problems with the manner in which the federal government issues federal grant funding and the nature of the grants that it funds, President Trump recently announced a sweeping new grant review and approval process in Executive Order 14332, “Improving Oversight of Federal Grantmaking.” The Executive Order could significantly impact what types of grants are funded over the next few years, and who receives those grants.
The primary changes directed in Executive Order 14332 are:
- Development of detailed agency approval processes for issuance of funding opportunity notices and awards of discretionary grants;
- Requirement that agencies account for mandatory considerations that advance the administration’s priorities when issuing discretionary awards; and
- Instructions to the Office of Management and Budget (OMB) to revise the underlying regulations pertaining to grant applications and awards, and to agencies to ensure inclusion of termination and other provisions in all grants.
At the same time, the administration has threatened a novel use of the rights that it obtains in patents developed with federal funding under the Bayh-Dole Act. The Department of Commerce, which is responsible for federal patent matters, recently threatened to invoke these rights against Harvard University. Specifically, Commerce said that it might exercise its “march-in” rights to grant third-parties licenses to Harvard’s federally funded inventions and/or take title to the inventions itself. Commerce also launched an investigation into Harvard’s federal research programs. It is almost certain that these investigations and threats will expand to other institutions.
New Agency Grant Approval Processes
Under the executive order, each agency must designate a “senior appointee,” defined as a political appointee at the GS-15 Level or in the Senior Executive Service (i.e., not a career government worker), “who shall be responsible for creating a process to review new funding opportunity announcements and to review discretionary grants to ensure that they are consistent with agency priorities and the national interest.” This process must include at least the following elements for each funding opportunity announcement:
(i) Review and approval by one or more senior appointees or their designees;
(ii) Continuation of existing coordination with OMB;
(iii) Where appropriate, review by designated subject-matter experts as identified by the agency head or the agency head’s designee;
(iv) Review of funding opportunity announcements for simplicity, “with a goal of minimizing the need for legal or technical expertise in drafting an application”;
(v) Interagency coordination to see if another agency has a similar funding opportunity, “to promote consistency and eliminate redundancy”; and
(vi) “[F]or scientific research discretionary grants, review by at least one subject matter expert in the field of the application, who may be a member of the grant review panel, the program officer, or an outside expert.”
In addition, each discretionary grant award must be reviewed before issuance “to ensure that the awards are consistent with applicable law, agency priorities, and the national interest.” This assessment must be conducted by the grant review panel or responsible program office in coordination with the senior appointee or that appointee’s designee.
Finally, agencies must designate one or more other senior appointees “to review discretionary awards on an annual basis for consistency with agency priorities and substantial progress.” This annual review process also must include “an accountability mechanism for officials responsible for selection and granting of the awards.” In other words, if the annual reviewer finds any prior award problematic, the agency employee(s) responsible for the award decision may face consequences, presumably including termination.
No agencies may issue grant awards until these new processes are in place, except with approval of the designated senior appointee.
Notably exempt from these procedures are non-discretionary grant programs created by Congress, such as block grants, those awarded based on statutory formulas, and disaster recovery grants.
Mandatory Considerations for Discretionary Awards
Senior appointees are to use their discretion in considering notices of funding opportunities and in making award decisions, and are not to defer to the recommendations of others. Awards must “demonstrably advance the President’s policy priorities” and cannot be used to promote:
(A) Racial preferences or other forms of racial discrimination by the grant recipient, including activities where race or intentional proxies for race will be used as a selection criterion for employment or program participation;
(B) Denial by the grant recipient of the sex binary in humans or the notion that sex is a chosen or mutable characteristic;
(C) Illegal immigration; or
(D) Any other initiatives that compromise public safety or promote anti‑American values.
The executive order also directs that appointees favor “institutions with lower indirect cost rates” and a broader range of recipients beyond “a select group of repeat players.” These instructions go to the administration’s perception that too large of a percentage of grant funding covers university facilities and administrative costs, and that select institutions are repeatedly favored while others, especially those lacking sophisticated legal and technical expertise to advise on approaches to funding opportunities, lose out.
Finally, for scientific research, the executive order repeatedly emphasizes the need for “Gold Standard Science,” without defining this term.[1]
OMB and Agency Revision of Grant Regulations and Terms
The executive order instructs the Director of OMB to revise the Uniform Guidance (2 CFR Part 200) to simplify the grant application process. It further directs changes to ensure that all discretionary grants permit termination for convenience, “[i]ncluding when the award no longer advances agency priorities of the national interest.” The order allows “appropriate exceptions” from these termination provisions for an interesting list of grant types, including those related to international trade agreements and those awarded under two semiconductor incentive programs (title XCIX of the 2021 National Defense Authorization Act and the CHIPS Act), and Division F of the Infrastructure Investment and Jobs Act (pertaining to broadband). All other sections of the Infrastructure Act, however, are seemingly subject to convenience termination.
In addition to these activities by OMB, individual agencies are tasked with ensuring that termination rights are provided in all discretionary awards, permitting termination where grants are found to no longer be in the “national interest” or to “no longer effectuate program goals or agency priorities.” Agencies also must include terms that prohibit automatic draw down of grants funds without affirmative agency authorization, and that require grantees to provide written explanations and support for each withdrawal of funds.
Threatened Invocation of March-In Rights and Patent Title Shifting Provisions Against Federal Grantees
Potentially more problematic for federal grantees is the prospect of the administration conducting a wholesale review of grantees’ compliance with the laws and regulations pertaining to disclosure of federally funded inventions. As evidenced by the recent activity against Harvard, these investigations could lead to invocation of the march-in right provisions of the Bayh-Dole Act, which allow federal agencies to grant licenses to third parties under certain conditions. These conditions include situations where agencies find that the original inventor of a federally funded invention failed to commercialize the invention, or where national security or public health and safety concerns so require. The government also has the ability under the Bayh-Dole Act to take title to patented inventions that were not timely or properly disclosed to the funding agency, or where other statutory or regulatory requirements were not followed.
In practice, the federal government has very rarely invoked its march-in rights or pursued other remedies under the Bayh-Dole Act, although lawmakers on both sides of the aisle have suggested expansion of the use of these remedies at various points in time.[2] Because these remedies are almost never pursued, there is limited legal authority as to what the bounds of these remedies may be, and it is difficult to assess the likelihood of success a federal grantee or contractor may have in challenging the government’s decision to use march-in rights to force a compulsory third-party license or to take title to patents for itself. Federal funding recipients with concerns about past or current compliance with commercialization efforts and invention disclosure requirements should consult with counsel to assess risk and ameliorate past errors, if any.
What Does All of This Mean for Grant Applicants and Recipients?
Grant applicants and those with pending applications should be aware that there may be delays in the issuance of discretionary federal funding awards while agencies develop processes to implement the executive order’s requirements. Institutions and organizations applying for grants should carefully examine notices of funding opportunities for new restrictions around diversity, equity, and inclusion and serving immigrant and transgender populations. Indirect rate caps may be imposed and, even where they are not, high indirect rates could be a barrier to grant awards. This said, the changes could present new opportunities for organizations that have not previously been successful in obtaining grant funding, or that are newly seeking discretionary awards.
Notwithstanding the threats related to march-in rights and government claims of title to inventions, we would expect these measures to be used sparingly, if at all, and any threats of such to be focused particularly against universities that already have been subjected to scrutiny by the administration. It is always a good idea, however, to regularly re-examine your organization’s past and ongoing compliance with subject invention disclosure requirements, and to remedy errors or improve processes whenever deficiencies are uncovered.
[1] Although not mentioned in this executive order, the administration has previously used this term in another executive order, Executive Order 14303, Restoring Gold Standard Science (May 23, 2025), which directed the Office of Science and Technology Policy to issue guidance to agencies on production and use of scientific information that is, among other things, reproducible, transparent, subject to unbiased peer review, and without conflicts of interest.
[2] See, e.g., our prior article on the Biden Administration’s proposed use of march-in rights to keep down drug prices.
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