This Presidential Action establishes a new policy favoring fixed-price contracts with performance-based considerations as the default method for federal procurement across executive branch agencies to enhance cost predictability, taxpayer protection, and contractor accountability.
The order mandates that cost-reimbursement and other non-fixed-price contracts require written justification and, if exceeding set monetary thresholds (ranging from \$10 million to \$100 million depending on the agency), explicit written approval from the agency head.
Furthermore, agencies must review their current top ten largest non-fixed-price contracts within 90 days to facilitate restructuring towards fixed-price terms, and the Office of Management and Budget (OMB) is tasked with issuing implementation guidance and proposing necessary amendments to the Federal Acquisition Regulation.
Arguments For
Taxpayer Protection and Fiscal Discipline: Prioritizing fixed-price contracts ensures greater cost predictability and budget discipline, protecting taxpayer funds by reducing the government's exposure to overspending characteristic of cost-reimbursement models.
Incentivizing Performance: Fixed-price contracts with performance-based considerations directly reward contractors for achieving well-defined outcomes efficiently, unlike cost-reimbursement contracts which may incentivize higher spending.
Improving Efficiency: Adopting private-sector best practices found in fixed-price contracting streamlines procurement and administration processes while increasing contractor accountability for timely and effective deliverables.
Accountability for Exceptions: Requiring written justification and high-level approval (Agency Head) for non-fixed-price contracts exceeding specific dollar thresholds ensures that exceptions to the new default are carefully considered and properly managed.
Arguments Against
Restricting Necessary Flexibility: For complex projects, research, or development phases where outcomes are inherently unpredictable (such as R&D or emergency response), mandating fixed-price contracts may be impractical or impossible, potentially stifling innovation or slowing critical efforts.
Implementation Burden and Delays: The strict requirements, including written justifications, high-level approvals for large contracts, and the 90-day mandatory review/restructuring of the top 10 non-fixed-price contracts, could introduce significant administrative hurdles and procurement delays.
Contract Renegotiation Challenges: Forcing the modification or renegotiation of existing, ongoing contracts within 90 days might lead to disputes, unfavorable terms for the government down the line, or unanticipated contract administration difficulties.
Unintended Consequences in Specialized Areas: While the order exempts certain R&D and emergency contracts, broadly limiting the use of cost-reimbursement might disadvantage the government in competitive bidding environments where specific, high-risk technical projects require that contracting flexibility to attract the best specialized contractors.
Presidential Actions
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1. Purpose. The American people expect their Government to operate with integrity, efficiency, and transparency. For too long, Federal procurement has tolerated unpredictable costs, bloated overhead, and weak performance incentives. The United States Government must adopt the best business practices to protect taxpayer dollars, hold contractors accountable, and achieve demonstrable returns on investment.
Many private-sector contracts focus on driving performance rather than ever-increasing costs, often dictating a fixed cost for a well-defined outcome. Fixed-price contracts are characterized by clearly defined outcomes and deliverables on predictable timelines for fixed prices that generally are not adjusted based on contractors’ costs, and often tie profit to the contractors’ performance, rewarding work that exceeds expectations and penalizing subpar performance. This performance-based model encourages contractors to control costs and expeditiously meet deliverables to maximize profits. Many Government contracts, however, operate on what is known as a “cost-reimbursement” model. Under that model, Government contractors are guaranteed reimbursement for their allowable incurred costs, and may receive profit margins on top of expenses. Cost-reimbursement contracts frequently allow for poorly defined product or service deliverables and increase the Government’s exposure to overspending by providing little incentive to control costs.
A review of spending across the Government in Fiscal Year 2024 identified approximately $120 billion obligated on cost-reimbursement consulting contracts alone. While there are circumstances in which cost-reimbursement contracting is appropriate, such as research and the pre-production developmental phase of major systems acquisition, it should be the exception, granted only in limited circumstances and with appropriate senior-level accountability at the agency.
To ensure that Government contracts incentivize performance rather than cost inflation, it is the policy of my Administration that fixed-price contracts with performance-based considerations should serve as the default and preferred method of procurement in order to advance cost predictability and budget discipline, appropriate contractor incentives and accountability, and streamlined procurement and contract administration.
Sec. 2. Default to Fixed-Price Contracting. (a) To the maximum extent consistent with law, and except as provided in subsection (b) of this section, executive branch departments and agencies (agencies) shall, in procurement, utilize fixed-price contracts, which for purposes of this order shall mean fixed-price contracts as defined in Part 16 of the Federal Acquisition Regulation, codified at title 48, Code of Federal Regulations, or contracts that tie profit to performance-based metrics when appropriate.
(b)(i) Use of any non-fixed-price contract, including a cost-reimbursement contract, a time-and-material contract, a labor-hour contract, or any other non-fixed-price type of contract under Part 16 of the Federal Acquisition Regulation, must be justified in writing by the contracting officer to the agency head.
(ii) If the value of a non-fixed-price contract, or in the case of a hybrid contract, the value of the non-fixed-price portion of the contract, exceeds the following value, then the agency head must approve the contract in writing:
(A) $100 million, in the case of a Department of War contract;
(B) $35 million, in the case of a National Aeronautics and Space Administration contract;
(C) $25 million, in the case of a Department of Homeland Security contract; or
(D) $10 million, in the case of a contract involving an agency other than the Department of War, the Department of Homeland Security, or the National Aeronautics and Space Administration.
(iii) Agency heads may delegate approval under subsection (b)(ii) of this section to appropriate non‑career employees within the agency.
(iv) Subsection (b)(ii) of this section shall not apply to contracts that:
(A) support response to an emergency, major disaster, or contingency operation as defined in Part 2 of the Federal Acquisition Regulation; or
(B) involve research and development or pre‑production development for major systems acquisition, as governed by Parts 34-35 of the Federal Acquisition Regulation.
(c)(i) Within 90 days of the date of this order, each agency head shall review and, to the maximum extent practicable and consistent with law, seek to modify, restructure, or renegotiate its 10 largest non-fixed-price contracts by dollar value (including non-fixed-price contracts entered into on behalf of another agency) to facilitate use of fixed prices and performance-based incentives for contract deliverables to the maximum extent practicable.
(ii) Subsection (c)(i) of this section shall not apply to contracts that involve research and development or pre-production development for major systems acquisition, as governed by Parts 34-35 of the Federal Acquisition Regulation, or contracts that support response to an emergency, major disaster, or contingency operation as defined in Part 2 of the Federal Acquisition Regulation.
(d) Each agency head shall report semi-annually to the Director of the Office of Management and Budget (OMB) the number of, value of, and written justifications for, any non-fixed-price contracts approved under subsection (b) of this section. Agency heads shall submit the first report no later than 90 days after the date of this order. As part of the first report, agency heads shall identify opportunities, beyond the contracts identified in subsection (c) of this section, for adjusting current non-fixed-price contracts toward fixed-price contracts.
(e) The requirements in this section apply, to the maximum extent practicable, whether an agency is entering into contracts on its own behalf or on behalf of another agency.
(f) When necessary to comply with the provisions of this section before the amendments contemplated by section 3(b) of this order are completed, agencies shall utilize applicable deviations from provisions of the Federal Acquisition Regulation, to the maximum extent practicable.
Sec. 3. Implementation. (a) Within 45 days of the date of this order, the Director of OMB shall issue guidance to agencies to ensure consistent implementation of this order.
(b) Within 120 days of the date of this order, the Administrator for Federal Procurement Policy shall:
(i) propose, in coordination with the Federal Acquisition Regulatory Council, amendments to the Federal Acquisition Regulation, consistent with the policy in section 1 of this order; and
(ii) develop, in coordination with Defense Acquisition University and the Federal Acquisition Institute, a program that agencies shall use to train program and contracting employees on the formation, use, negotiation, and management of fixed-price contracts to minimize exceptions from section 2(a) of this order.
Sec. 4. Severability. If any provision of this order, or the application of any provision to any person or circumstance, is held to be invalid, the remainder of this order and the application of its provisions to any other persons or circumstances shall not be affected thereby.
Sec. 5. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The costs for publication of this order shall be borne by the Office of Management and Budget.
DONALD J. TRUMP
THE WHITE HOUSE,
April 30, 2026.
The post Promoting Efficiency, Accountability, and Performance in Federal Contracting appeared first on The White House.
The document begins with navigation elements indicating it is a Presidential Action.
The main body starts by stating that the President issues this order based on constitutional and legal authority.
Section 1 establishes the Purpose: to move Federal procurement away from practices that allow unpredictable costs and bloated overhead toward integrity, efficiency, and transparency.
It contrasts fixed-price contracts, which incentivize performance, with cost-reimbursement contracts, which guarantee cost coverage and offer little incentive for efficiency, noting that $120 billion was spent on cost-reimbursement consulting contracts in FY 2024.
The policy declares fixed-price contracts with performance considerations as the preferred default method.
Section 2 details the Default to Fixed-Price Contracting.
Executive agencies must primarily use fixed-price contracts, defined by the Federal Acquisition Regulation (FAR), or contracts tying profit to performance metrics.
Any use of non-fixed-price contracts, like cost-reimbursement, requires a written justification from the contracting officer to the agency head.
If the non-fixed-price portion exceeds specific dollar thresholds ($100M for DoD, $35M for NASA, $25M for DHS, or $10M for other agencies), the agency head must personally approve it, though this approval can be delegated to non-career employees.
Exceptions apply to contracts supporting emergency response or those involving research and development/major systems acquisition as governed by specific FAR parts.
Section 2 also imposes review requirements: within 90 days, agency heads must review and seek to restructure their 10 largest non-fixed-price contracts toward fixed-price structures, excluding R&D/emergency contracts.
Agency heads must then semi-annually report the number, value, and justifications for approved non-fixed-price contracts to the Director of the Office of Management and Budget (OMB).
Section 3 covers Implementation.
Within 45 days, OMB must issue guidance for consistent application.
Within 120 days, the Administrator for Federal Procurement Policy must coordinate with the Federal Acquisition Regulatory Council to propose amendments to the FAR and develop a training program for agency employees on managing fixed-price contracts to reduce exceptions.
Sections 4 and 5 address standard provisions.
Section 4 is the Severability clause, stating that if one part of the order is found invalid, the rest remains in effect.
Section 5 outlines General Provisions, confirming the order does not impair existing statutory authority, must be consistent with appropriations, and does not create new enforceable legal rights against the United States.
The document concludes with the President's name and the date, April 30, 2026.
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
The President formally initiates the document, asserting the legal authority granted by the U.S. Constitution and federal laws to issue this directive.
Section 1. Purpose. The American people expect their Government to operate with integrity, efficiency, and transparency. For too long, Federal procurement has tolerated unpredictable costs, bloated overhead, and weak performance incentives. The United States Government must adopt the best business practices to protect taxpayer dollars, hold contractors accountable, and achieve demonstrable returns on investment.
This section outlines the goal of the action: to improve government operations by demanding integrity, efficiency, and transparency in federal procurement.
It criticizes current procurement practices for leading to high costs and poor incentives, stating the government needs to adopt superior business practices to safeguard taxpayer money and ensure accountability.
Many private-sector contracts focus on driving performance rather than ever-increasing costs, often dictating a fixed cost for a well-defined outcome. Fixed-price contracts are characterized by clearly defined outcomes and deliverables on predictable timelines for fixed prices that generally are not adjusted based on contractors’ costs, and often tie profit to the contractors’ performance, rewarding work that exceeds expectations and penalizing subpar performance. This performance-based model encourages contractors to control costs and expeditiously meet deliverables to maximize profits. Many Government contracts, however, operate on what is known as a “cost-reimbursement” model. Under that model, Government contractors are guaranteed reimbursement for their allowable incurred costs, and may receive profit margins on top of expenses. Cost-reimbursement contracts frequently allow for poorly defined product or service deliverables and increase the Government’s exposure to overspending by providing little incentive to control costs.
This paragraph contrasts two types of contracts.
Fixed-price contracts are preferred in the private sector because they specify a final cost for defined work, rewarding contractors for efficiency and penalizing poor results.
In contrast, cost-reimbursement contracts guarantee contractors repayment of their allowable costs plus a profit margin, which creates little motivation for the contractor to control spending or clearly define deliverables.
A review of spending across the Government in Fiscal Year 2024 identified approximately $120 billion obligated on cost-reimbursement consulting contracts alone. While there are circumstances in which cost-reimbursement contracting is appropriate, such as research and the pre-production developmental phase of major systems acquisition, it should be the exception, granted only in limited circumstances and with appropriate senior-level accountability at the agency.
The order cites data from Fiscal Year 2024, showing about $120 billion spent using cost-reimbursement contracts just for consulting services.
It acknowledges that cost-reimbursement contracts remain appropriate in specific situations, such as research and development phases for major systems, but emphasizes that such use must be rare and require oversight from senior agency leadership.
To ensure that Government contracts incentivize performance rather than cost inflation, it is the policy of my Administration that fixed-price contracts with performance-based considerations should serve as the default and preferred method of procurement in order to advance cost predictability and budget discipline, appropriate contractor incentives and accountability, and streamlined procurement and contract administration.
This paragraph establishes the central policy directive: fixed-price contracts tied to performance metrics must become the standard for government purchasing.
This shift aims to increase cost predictability, enforce budget discipline, properly incentivize contractors, and simplify the processes for managing contracts.
Sec. 2. Default to Fixed-Price Contracting. (a) To the maximum extent consistent with law, and except as provided in subsection (b) of this section, executive branch departments and agencies (agencies) shall, in procurement, utilize fixed-price contracts, which for purposes of this order shall mean fixed-price contracts as defined in Part 16 of the Federal Acquisition Regulation, codified at title 48, Code of Federal Regulations, or contracts that tie profit to performance-based metrics when appropriate.
Section 2 mandates that executive agencies must use fixed-price contracts, as defined in Part 16 of the FAR, or contracts linking profit to performance, to the greatest extent legally allowed.
This requirement is subject to exceptions detailed in the following subsection.
(b)(i) Use of any non-fixed-price contract, including a cost-reimbursement contract, a time-and-material contract, a labor-hour contract, or any other non-fixed-price type of contract under Part 16 of the Federal Acquisition Regulation, must be justified in writing by the contracting officer to the agency head.
For any non-fixed-price contract type, such as cost-reimbursement or time-and-material, the contracting officer must provide a written justification addressed to the agency head explaining the necessity of using that contract type.
(ii) If the value of a non-fixed-price contract, or in the case of a hybrid contract, the value of the non-fixed-price portion of the contract, exceeds the following value, then the agency head must approve the contract in writing:
(A) $100 million, in the case of a Department of War contract;
(B) $35 million, in the case of a National Aeronautics and Space Administration contract;
(C) $25 million, in the case of a Department of Homeland Security contract; or
(D) $10 million, in the case of a contract involving an agency other than the Department of War, the Department of Homeland Security, or the National Aeronautics and Space Administration.
If a non-fixed-price contract (or the non-fixed portion of a hybrid contract) surpasses certain dollar limits, the agency head must provide explicit written approval.
The threshold varies by agency: $100 million for the Department of War, $35 million for NASA, $25 million for DHS, and $10 million for all other agencies.
(iii) Agency heads may delegate approval under subsection (b)(ii) of this section to appropriate non‑career employees within the agency.
Agency heads retain the authority to grant approvals for large, non-fixed-price contracts, but they are permitted to delegate this specific approval power to suitable non-career employees within their department or agency.
(iv) Subsection (b)(ii) of this section shall not apply to contracts that:
(A) support response to an emergency, major disaster, or contingency operation as defined in Part 2 of the Federal Acquisition Regulation; or
(B) involve research and development or pre‑production development for major systems acquisition, as governed by Parts 34-35 of the Federal Acquisition Regulation.
The high-level approval requirement mentioned in subsection (b)(ii) does not apply to contracts designated for emergency responses, major disasters, contingency operations, or those contracts specifically related to research, development, or pre-production phases for major systems acquisition, as defined by the FAR.
(c)(i) Within 90 days of the date of this order, each agency head shall review and, to the maximum extent practicable and consistent with law, seek to modify, restructure, or renegotiate its 10 largest non-fixed-price contracts by dollar value (including non-fixed-price contracts entered into on behalf of another agency) to facilitate use of fixed prices and performance-based incentives for contract deliverables to the maximum extent practicable.
Each agency head must, within 90 days of the order's date, review their 10 most valuable non-fixed-price contracts.
The agency must then attempt, where legally and practically feasible, to modify, restructure, or renegotiate these contracts to incorporate fixed prices and performance incentives.
(ii) Subsection (c)(i) of this section shall not apply to contracts that involve research and development or pre-production development for major systems acquisition, as governed by Parts 34-35 of the Federal Acquisition Regulation, or contracts that support response to an emergency, major disaster, or contingency operation as defined in Part 2 of the Federal Acquisition Regulation.
The requirement to review and attempt restructuring of the top ten non-fixed-price contracts does not apply to contracts dealing with research and development/major systems acquisition or those supporting emergency responses, aligning with the exemptions in subsection (b)(iv).
(d) Each agency head shall report semi-annually to the Director of the Office of Management and Budget (OMB) the number of, value of, and written justifications for, any non-fixed-price contracts approved under subsection (b) of this section. Agency heads shall submit the first report no later than 90 days after the date of this order. As part of the first report, agency heads shall identify opportunities, beyond the contracts identified in subsection (c) of this section, for adjusting current non-fixed-price contracts toward fixed-price contracts.
Agency leadership must report semi-annually to the OMB Director concerning all non-fixed-price contracts approved under the order, listing the count, total value, and underlying justifications.
The initial report is due within 90 days and must also detail any further opportunities identified for converting other non-fixed-price contracts to fixed-price structures.
(e) The requirements in this section apply, to the maximum extent practicable, whether an agency is entering into contracts on its own behalf or on behalf of another agency.
The stipulations within Section 2 are applicable to an agency whether it is signing a contract for its own needs or executing a contract on behalf of another government agency, where practical.
(f) When necessary to comply with the provisions of this section before the amendments contemplated by section 3(b) of this order are completed, agencies shall utilize applicable deviations from provisions of the Federal Acquisition Regulation, to the maximum extent practicable.
If an agency needs to adhere to the new rules in Section 2 before the FAR amendments mentioned in Section 3(b) are finalized, agencies are authorized to use existing, applicable deviations from the FAR, as much as possible.
Sec. 3. Implementation. (a) Within 45 days of the date of this order, the Director of OMB shall issue guidance to agencies to ensure consistent implementation of this order.
The Director of OMB must issue official guidance to all agencies within 45 days of the order to ensure everyone implements the directives consistently.
(b) Within 120 days of the date of this order, the Administrator for Federal Procurement Policy shall:
(i) propose, in coordination with the Federal Acquisition Regulatory Council, amendments to the Federal Acquisition Regulation, consistent with the policy in section 1 of this order; and
(ii) develop, in coordination with Defense Acquisition University and the Federal Acquisition Institute, a program that agencies shall use to train program and contracting employees on the formation, use, negotiation, and management of fixed-price contracts to minimize exceptions from section 2(a) of this order.
Within 120 days, the Administrator for Federal Procurement Policy must take two key actions.
First, they must coordinate with the Federal Acquisition Regulatory Council to propose changes to the Federal Acquisition Regulation (FAR) that align with the policy laid out in Section 1.
Second, they must create a training program, in collaboration with the Defense Acquisition University and the Federal Acquisition Institute, to educate employees on using fixed-price contracts effectively to reduce the need for exceptions.
Sec. 4. Severability. If any provision of this order, or the application of any provision to any person or circumstance, is held to be invalid, the remainder of this order and the application of its provisions to any other persons or circumstances shall not be affected thereby.
Under the Severability clause, if a court declares any specific part of this order or its application to a specific entity invalid, the remainder of the order will remain legally binding and fully effective on all other persons and circumstances.
Sec. 5. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The costs for publication of this order shall be borne by the Office of Management and Budget.
The final section sets general rules.
It clarifies that the order does not override existing legal authority granted to departments or agencies, nor does it affect the OMB Director's statutory roles concerning budget or legislative plans.
Implementation must follow existing law and available funding.
Crucially, the order does not grant any new substantive or procedural rights enforceable against the United States or any other party.
Finally, OMB is responsible for covering the publication costs.
DONALD J. TRUMP
THE WHITE HOUSE,
April 30, 2026.
This confirms that Donald J. Trump signed the order on April 30, 2026, while at The White House.
The post Promoting Efficiency, Accountability, and Performance in Federal Contracting appeared first on The White House.
This is standard website footer content indicating where the content was originally posted online.
Related
National Foster Care Month, 2026
* The President proclaimed May 2026 as National Foster Care Month, recognizing caregivers and promoting ongoing administration efforts to strengthen the foster care system.
Read MorePromoting Retirement-Savings Access for American Workers by Establishing TrumpIRA.gov
* Established the policy goal of providing low-cost, portable retirement savings options for underserved workers and directed the creation of TrumpIRA.gov to facilitate access to these accounts and the Federal Saver's Match.
Read MoreNominations and Withdrawals Sent to the Senate
The President transmitted a list of eleven new nominations to the Senate for confirmation across diplomatic, domestic agency, and judicial branches, while simultaneously withdrawing four previously submitted nominations.
Read MoreNominations Sent to the Senate
The President formally sent a list of nominations for Senate confirmation to key governmental roles, spanning diplomatic, justice, defense, economic, and health sectors.
Read More