Executive Order Tightens Federal Grants Oversight
On August 7, 2025, President Trump signed Executive Order 14332, Improving Oversight of Federal Grantmaking, which represents a major shift in how discretionary federal grants are awarded, managed, and terminations.
Some of the key aspects of the Executive Order are included but are not limited to:
- Senior-Level Political Review Required
Agencies must now appoint a senior political appointee to review all new funding opportunity announcements (FOAs) and discretionary grants to ensure they align with agency priorities and national interest.
- Termination for Convenience Claus
All discretionary grants must include a “termination for convenience” clause, giving agencies the authority to rescind awards, including when the award no longer advances the agency priorities or national interest
- Simplified, Plain-Language Applications
Funding opportunity announcements and related forms must now be concise and written in plain language, minimizing the need for applicants to hire technical or legal experts.
- Stricter Financial Controls
When all else is equal, preference awards should be give to organizations with lower indirect cost rates
Drawdown requests now require explicit agency authorization and written justification for each request
- Policy-Driven
Discretionary awards must, where applicable, demonstrate advancing the President’s policy priorities
- Annual Review and Accountability
Annually, agency-appointed senior staff must review discretionary grants for progress and alignment with priorities.
- Temporary Freeze on New Announcements
Until the new review process is fully established, agencies cannot issue new funding opportunity announcements without senior appointee approval, except where legally required.
Why This Matters for South Dakota Hospitals
- Greater Uncertainty in Grant Stability: Even ongoing grants may now face abrupt termination due to changing priorities, no longer poor performance only.
- More Documentation Needed: Hospitals will need to maintain tighter financial controls, preparing written rationales for drawdown requests and ensuring compliance.
- Lower Indirect Costs Favorability: Facilities with historically higher overhead rates may find themselves at a disadvantage.
- Fewer or Delayed Opportunities: Expect fewer grant announcements, potential delays, and a more complex approval process.
- Policy Alignment Matters: Grants must clearly align with federal priorities; failure to do so may result in disqualification.
What You Can Do Now
| Key Action | Why It Helps |
| Audit Active Grants | Identify discretion grants possibly affected by termination clauses. |
| Document Everything | Prepare detailed descriptions for project milestones and drawdowns. |
| Monitor Grant Notices | Keep an eye on delays or changes in FOA availability. |
Bottom Line
This Executive Order marks a fundamental change in federal grantmaking—shifting the process toward political oversight, increased accountability, and financial control. For South Dakota hospitals, it means adapting quickly to a landscape where grants are more volatile, documentation demands are higher, and the funding process may be more restrictive.
To learn more or to view the Executive Order 14332, Improving Oversight of Federal Grantmaking, click here
