Over the past year, the federal government has moved beyond broad policy statements concerning diversity, equity, and inclusion (DEI) and into the operational mechanics of federal grant and contract administration. New executive orders, agency-specific grant terms, proposed government-wide certifications, foreign-funding requirements, and an increasingly active False Claims Act (FCA) enforcement posture give rise to overlapping compliance risks for colleges and universities.

Four developments warrant particular attention as the 2026–2027 academic year get underway: (1) new certifications and grant conditions addressing DEI, immigration, foreign influence, public safety, and other federal priorities; (2) heightened FCA exposure; (3) increased scrutiny of foreign funding and research relationships; and (4) proposed revisions to the government-wide and Education Department grant-administration frameworks.

Grant Certifications and Contract Clauses

Executive Order 14173, issued January 21, 2025, directed agencies to include grant certifications concerning illegal discrimination, including requirements that grantees not engage in prohibited DEI practices. The order also identifies compliance with those requirements as material to federal payment decisions under the FCA.

The National Institutes of Health (NIH), National Science Foundation (NSF), and other agencies have incorporated additional requirements into grant terms and certifications concerning DEI, nondiscrimination, foreign influence, research personnel, and other federal priorities. Some certifications extend beyond the particular activity supported by a grant and require an institution-wide assessment. NSF terms also require recipients to certify that they will not engage in a “discriminatory prohibited boycott.”

On January 28, 2026, GSA proposed government-wide SAM.gov certifications requiring recipients of federal financial assistance to certify compliance with the Constitution, federal laws, and executive orders prohibiting unlawful discrimination based on race or color. The proposal incorporates examples from Department of Justice (DOJ) guidance, including race-based scholarships, mandatory diversity statements, diverse hiring requirements, and race-based training. If finalized, the certifications could create institution-wide obligations across multiple federal funding relationships.

Federal contractors face related but distinct requirements. Executive Order 14398, issued March 26, 2026, requires a new contract clause concerning “racially discriminatory DEI activities.” FAR 52.222-90 defines such activities to include disparate treatment based on race or ethnicity in recruitment, employment decisions, contracting relationships, program participation, and allocation of institutional resources. The clause requires contractors to provide information and access to records, flow the clause down to subcontractors, and report known or reasonably knowable violations whether those violations are from the contractor or subcontractor. It also states that compliance is material to federal payment decisions under the FCA. FAR Council guidance directs agencies to include the clause in new contracts effective April 25, 2026, and in most existing contracts by December 31, 2026 through bilateral modifications.

Foreign Funding and Research Compliance

Executive Order 14282, issued April 23, 2025, directed enhanced enforcement of Section 117 foreign-funding disclosure requirements and provided that compliance may be material to federal grant eligibility. Institutions with international funding and research activities should assess foreign research relationships, research personnel, and restrictions concerning malign foreign talent recruitment programs.

Proposed Changes to Grant Administration

On May 29, 2026, the Office of Management and Budget (OMB) proposed converting the Uniform Guidance in 2 CFR Part 200 into a binding “Uniform Grants Regulation.” The proposal would substantially revise discretionary award review, peer review, indirect cost rates, fixed-amount awards, foreign collaborations, nondiscrimination and DEI requirements, and agency authority to suspend or terminate awards. For more information, see Hunton’s Government Contracts Intelligence Briefing blog post on this topic available here.

Separately, the Department of Education (ED) has proposed changes to the Education Department General Administrative Regulations (EDGAR). The proposal would expressly recognize ED authority to suspend or terminate discretionary awards for noncompliance, for the convenience of the Secretary, by mutual agreement, upon recipient notification, or under additional award terms. It would also provide greater discretion over continuation funding and permit ED to consider performance, unspent funds, and other available information when determining whether to make a continuation award.

Additional ED proposals would:

• Require grant-funded hiring, admissions, promotion, and compensation practices to be based on merit and conducted without regard to specified protected characteristics or proxies, subject to exceptions;
• Permit a competitive preference for applicants voluntarily charging lower indirect costs than their negotiated rates;
• Expand flexibility in discretionary grant-selection criteria;
• Revise evidence-related definitions;
• Consolidate certain funding information on Grants.gov rather than the Federal Register; and
• Require state grantees to comply with executive orders when using federal funds.

Assessing FCA Risk

Certification is the common thread across many of these developments. The FCA permits treble damages and statutory penalties for knowingly submitting false claims or making false statements material to a government payment. Its qui tam provisions allow whistleblowers (“qui tam relators”) to bring claims on behalf of the government and share in recoveries.

In recent months, the DOJ announced large settlements with federal contractors under its Civil Rights Fraud Initiative - $17 million with one contractor in April 2026 and $21 million with another contractor in August 2026 (neither were institutions of higher education). In these settlements, the DOJ flagged alleged discriminatory DEI practices, including diversity-linked compensation and restricted-access programs. DOJ has identified practices such as demographic hiring targets, “diverse slates,” compensation tied to diversity metrics, restricted mentoring or leadership programs, promotion and staffing decisions, and monthly summaries tracking demographic goals as potentially actionable. Also in 2026, the federal government launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.

DOJ has also encouraged private FCA actions and noted that an institution’s public statements about DEI commitments – in websites, annual reports, and strategic plans – could support allegations that an institution’s conduct is inconsistent with its federal certifications.

Institutions should not treat certifications as routine administrative actions. Before an authorized official signs, the institution should understand what is being certified, identify the policies and practices implicated, and document the basis for its compliance determination.

Following Recent Litigation

The legal landscape remains unsettled. In July 2026, the U.S. District Court for the District of Massachusetts held that the government could not use 2 CFR § 200.340(a)(4) to cancel grants based on policy priorities identified after the awards were made. Courts have not uniformly adopted that interpretation.

In August 2026, the U.S. District Court for the District of Rhode Island vacated challenged Department of Health and Human Services (HHS) and Department of Housing and Urban Development (HUD) grant conditions, including DEI-related certifications and conditions requiring compliance with executive orders. The court found that the agencies had failed to adequately explain the abrupt changes, consider recipients’ reliance interests, and address conflicts with existing regulations.

Most recently, on September 1, 2026, the U.S. Court of Appeals for the Eleventh Circuit overturned a district court decision and left the qui tam provision of the FCA intact. Specifically, the Eleventh Circuit held that a qui tam relator (who could be a private individual) that brings fraud claims are not subject to the U.S. Constitution’s Article II Appointments Clause because they are “not officers of the United States subject to the Appointments Clause.” The case has been closely watched by qui tam litigators and the Supreme Court. The September 1, 2026 decision avoids a circuit split on the issue.

What Institutions Should Do Now

Institutions should consider the following steps as the 2026-2027 academic year gets underway:

• Establish a centralized process for reviewing certifications, award terms, renewals, and contract modifications.
• Conduct a focused, privileged review of DEI-related programs, admissions, scholarships, fellowships, recruitment, hiring, mentoring, leadership programs, Section 117 disclosures, foreign research relationships, and applicable agency terms.
• Map obligations across all federal funding streams, distinguishing award-specific requirements from institution-wide certifications.
• Document good-faith compliance analyses, particularly where requirements are ambiguous.
• Assess funding-continuity risks for discretionary awards, continuation funding, personnel, subawards, and contracts.
• Evaluate the financial effect of voluntarily reducing or waiving indirect-cost recovery.
• Review public institutional commitments for consistency with actual practices and federal representations.
• Confirm who is authorized to execute certifications and ensure signatories have access to the information necessary to support them.
• Monitor OMB’s proposed Uniform Grants Regulation, ED’s EDGAR rulemaking, final SAM.gov certifications, FAR 52.222-90, Section 117 enforcement, DOJ FCA activity, and related litigation.

Conclusion

Federal grant and contract compliance now extends beyond the terms of an individual award. Colleges and universities should evaluate how institutional policies and practices intersect with federal certifications, foreign-funding requirements, grant conditions, and potential FCA exposure. Institutions best positioned to navigate this environment will be those that establish a coordinated review process before an authorized official signs a certification or accepts an award—not after an agency or whistleblower questions it.

Hunton’s Higher Education Team regularly advises colleges and universities on compliance with federal laws, as well as grant and contract terms and compliance with conflicting state laws. Hunton’s government contracting, regulatory, and litigation teams regularly assist on issues related to federal grants and contracts and False Claims Act issues. If you have questions regarding these developments or their implications for your institution, please contact your Hunton Higher Education attorney.