Senate Appropriations Committee members voted to remove a proposed Office of Management and Budget rule that would have tightened oversight of federal grant spending in the upcoming budget continuing resolution.
The rule, introduced in May, required senior political appointees to sign off on agency grants and mandated that recipients report all subawards through the SAM system. It aimed to enforce existing law and increase transparency for taxpayers.
Committee chair described the rule as “deeply flawed” and noted widespread opposition from a large coalition of organizations. The measure was seen as a concession to Democratic members of the committee.
The proposal sought to address a long‑standing problem: the difficulty of tracing federal money once it leaves Washington. Without clear reporting, recipients could move funds through multiple layers without adequate public visibility.
A review of the largest domestic federal assistance programs found that more than 74 percent of grant funding could not be traced to a county, city, or ZIP code. Only 20.7 percent of prime‑award information was locally traceable, with subaward data adding a further five percent.
Subaward reporting is required by the Federal Funding Accountability and Transparency Act of 2006, yet compliance is low. A separate audit showed that although about 70 percent of prime recipients used subawards, only around ten percent reported them on the public database.
Under the rule, recipients would need to confirm that all subawards issued during the reporting period were entered in the SAM system. Agencies would be responsible for monitoring compliance and could terminate awards for non‑reporting.
Current reporting systems often contain duplicate descriptions and generic terminology, making it difficult to determine what was purchased or who benefited. Nearly all of the transactions reviewed used vague labels, providing little useful information to taxpayers.
While the rule would not resolve every shortfall, it would establish a first meaningful step by requiring downstream accountability and attaching penalties for persistent failures.
Removing these provisions would leave a system in which billions of dollars could move through state governments, nonprofits, and contractors with insufficient public oversight. Strengthening fiscal accountability is essential for preventing waste, fraud, and abuse and for ensuring that taxpayer money reaches its intended purpose.
