President Trump signed an Executive Order on “Promoting Efficiency, Accountability, and Performance in Federal Contracting” directing agencies to make fixed-price and performance-based contracts the default approach to procurement, with an emphasis on tying contractor profit to measurable outcomes.
The order requires contracting officers to justify the use of non-fixed-price contracts and mandates agency head approval for larger awards, including contracts exceeding $100 million at the Department of Defense, $35 million at NASA, $25 million at the Department of Homeland Security, and $10 million at other agencies. Agencies must also review and seek to renegotiate their 10 largest non-fixed-price contracts within 90 days to incorporate fixed-price structures where practicable. The Office of Management and Budget will issue implementation guidance within 45 days, and federal acquisition rules are set to be updated within 120 days.
The order also mandates semi-annual reporting on non-fixed-price contracts and follows findings that roughly $120 billion in FY2024 spending went to cost-reimbursement consulting contracts, which the Trump Administration argues weaken cost controls and performance incentives. A fact sheet on the EO is available here.