Federal Grant Recipients Face New Funding Delays and Compliance Uncertainty Under Senate FY 2027 Continuing Resolution

On August 2, 2026, the Senate Appropriations Committee released its proposed Continuing Appropriations and Extensions Act, 2027 (“Senate CR”). As currently drafted, the Senate CR would fund most federal agencies at FY 2026 levels through December 11, 2026. Importantly, it also introduces new restrictions on federal grant awards and delays anticipated revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). The restrictions appear to be a direct response to recent Office of Management and Budget (“OMB”) efforts to revise federal grant administration policies and expand agencies’ flexibility in administering federal financial assistance. By freezing implementation of proposed Uniform Guidance revisions and limiting funding actions during the continuing resolution period, Congress is signaling increased scrutiny of federal grant management and oversight.

For universities and colleges, healthcare providers, nonprofits, government contractors, tribal organizations, and state and local governments that depend on federal funding, the proposal creates immediate questions regarding grant timing, budgeting, compliance obligations, and program continuity.

Why This Matters

These provisions do not arise in a vacuum. Over the past year, OMB has pursued significant revisions to federal grants management requirements and agency implementation practices. While supporters viewed the changes as intended to modernize grant administration and improve program delivery, critics raised concerns regarding oversight, accountability, and the potential effects on congressionally authorized spending priorities. The Senate CR reflects those concerns by temporarily halting implementation of pending Uniform Guidance changes and limiting agencies’ ability to accelerate funding decisions, pending further congressional review.

Key Changes

1. Restrictions on Grant Awards

Section 109 of the Senate CR limits agencies’ ability to accelerate grant spending or make early funding distributions that could effectively commit future appropriations. Agencies may take a more cautious approach to new awards, continuation grants, and supplemental funding.

2. Limited Funding Actions

Section 110 of the Senate CR directs agencies to take only the most limited funding actions necessary to maintain ongoing activities, potentially delaying grant competitions, funding decisions, and award increments.

3. Uniform Guidance Delay

Section 157 would prevent the OMB from finalizing or implementing proposed revisions to the Uniform Guidance through December 11, 2026. The provision is widely viewed as a congressional response to OMB’s recent effort to revise federal grant administration and compliance requirements. As a result, existing grant administration, procurement, audit, and subrecipient management requirements remain in effect while policymakers continue to debate the scope and direction of future reforms.

Who Is Most Affected?

The proposal could affect any organization that relies on federal financial assistance, particularly:

• Universities and research institutions
• Healthcare organizations and academic medical centers
• State, local, and tribal governments
• Nonprofit and social service providers
• Housing, infrastructure, broadband, and transportation grant recipients
• Contractors and subrecipients supported by federal grants

NOTE: Organizations with pending applications, major renewals, funding increases, or time-sensitive projects face the greatest risk.

What Clients Should Do Now

Organizations should:

• Reassess FY 2027 budgets and cash-flow assumptions.
• Evaluate the impact of delayed awards on critical projects.
• Continue complying with existing Uniform Guidance requirements.
• Monitor agency-specific implementation guidance.
• Confer with legal counsel regarding strategy and navigating changes.
• Review subrecipient and pass-through funding arrangements.
• Develop contingency plans for delayed or incremental funding.

How Clark Hill Can Help

Clark Hill advises grant recipients, pass-through entities, contractors, educational institutions, healthcare organizations, nonprofits, and governmental entities on:

• Federal grant compliance and Uniform Guidance requirements
• Grant application and funding strategies
• Risk mitigation and funding continuity planning
• Agency engagement and advocacy
• Congressional and appropriations matters
• Audit, investigation, and enforcement matters involving federal awards

The Bottom Line

The Senate CR is more than a stopgap funding measure. It also reflects an emerging policy dispute between Congress and OMB over the future direction of federal grants administration. By restricting grant funding actions and delaying Uniform Guidance reforms, Congress has introduced additional uncertainty regarding both funding timelines and future compliance requirements, requiring recipients to closely monitor developments through at least December 11, 2026.

This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author(s) only and are not necessarily the views of Clark Hill PLC or Clark Hill Solicitors LLP. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.