Promoting Efficiency, Accountability, and Performance in Federal Contracting

The order directs all executive branch agencies to use fixed-price contracts — where the government pays a predetermined price for clearly defined deliverables — as the default and preferred method of procurement. Any use of a non-fixed-price contract (cost-reimbursement, time-and-materials, or labor-hour) must be justified in writing by the contracting officer to the agency head. If the non-fixed-price value exceeds tiered thresholds ($10M for most agencies, $25M for DHS, $35M for NASA, $100M for the Department of War), the agency head must also approve in writing. Within 90 days, each agency head must review its 10 largest non-fixed-price contracts and seek to restructure them toward fixed prices. Agencies must report semi-annually to OMB on non-fixed-price contract approvals.

The order exempts contracts supporting emergency or disaster response and those covering research and development or pre-production development for major systems acquisition. OMB must issue implementation guidance within 45 days, and the Administrator for Federal Procurement Policy must propose amendments to the Federal Acquisition Regulation and develop a training program within 120 days. A severability clause protects the rest of the order if any individual provision is invalidated.

All federal executive branch agencies and their contracting officers, who must adopt new approval and reporting workflows. Private-sector contractors currently holding or seeking cost-reimbursement or other non-fixed-price contracts with the federal government face potential contract renegotiation and new performance-based profit structures.

Contractors that have relied on guaranteed cost reimbursement from the government face restructured contracts and new financial risk tied to performance. Agencies must build approval chains and semi-annual reporting obligations, adding administrative steps to procurement decisions that currently bypass those controls.

OMB issues guidance within 45 days to standardize implementation. Agencies may use FAR deviations as a bridge until formal FAR amendments — proposed by the Federal Procurement Policy Administrator within 120 days in coordination with the Federal Acquisition Regulatory Council — are finalized. A parallel training program will be developed through Defense Acquisition University and the Federal Acquisition Institute. Semi-annual reports to OMB, due first within 90 days, create an ongoing accountability layer; the first report must also inventory additional contracts eligible for conversion. Agency heads may delegate approval authority to senior non-career employees.