The Special Competitive Studies Project (SCSP), a nonprofit focused on U.S. competitiveness in emerging technologies, has raised alarms over proposed changes to federal research grant regulations. The Office of Management and Budget (OMB) has suggested sweeping revisions to the rules governing federal grants, which SCSP argues could weaken the research enterprise that underpins American technology leadership.
In a recent article, SCSP President Ylli Bajraktari emphasized that while accountability for taxpayer dollars is essential, the proposed rule risks damaging the innovation engine that has been central to U.S. scientific success. He noted that the regulations contain several concerning provisions: senior political appointees would review every discretionary award, reviewers would be directed to weigh presidential policy priorities, peer review would be downgraded to 'advisory,' and agencies could terminate active research awards if priorities change after work has begun.
The stakes are measurable. According to SCSP's 2026 Tech Competition Scorecard, China holds a decisive lead in robotics for advanced manufacturing, and the U.S. lead in quantum is eroding. Federally funded research as a share of national R&D dropped nearly one-third between 2010 and 2019, and federal AI research spending remains far below the $32 billion annual level recommended by the National Security Commission on Artificial Intelligence. Bajraktari warned that America faces a funding gap and should not compound it with a confidence gap.
The proposed changes are modeled on termination-for-convenience clauses in government contracting, but research grants are fundamentally different. A grant supports multiyear experiments, doctoral researchers, and lab partnerships that generate data over time. Stopping work midstream destroys value that cannot be recovered, and the impact extends to companies, investors, national labs, and startups that rely on stable, merit-driven federal research.
SCSP has filed formal comments urging OMB to consider four points before finalizing the rule. First, keep merit at the center: scientific and technical merit should remain the primary basis for selecting proposals, with any override documented in writing against published criteria. Second, make awards durable: competitively awarded grants should not be terminated simply because policy priorities shift; termination should be reserved for legal violations, security concerns, or performance failures. Third, account for the private sector: agencies should assess whether changes deter co-investment, interrupt commercialization, or push talent toward competitors. Fourth, assess the competitive impact: OMB's analysis counts only paperwork costs, but forgone discoveries and deterred capital are real national security costs that warrant a technology-competitiveness impact assessment.
SCSP also urged OMB to delay the October 1 effective date, arguing that agencies need time to build procedures for implementing the new frameworks. As Bajraktari put it, 'When award decisions look political rather than technical, or when a grant can vanish because priorities shifted, private partners hedge, talent looks elsewhere, and the whole geometry of innovation weakens.'
To learn more, visit SCSP's website.
