Promoting Efficiency, Accountability, and Performance in Federal Contracting
May 5, 2026
May 5, 2026
Summary
Changes government purchasing rules to favor fixed-price deals, aiming to save money and make sure contractors deliver what they promise.
What problem does this solve?
The government often uses contracts that pay for a company's costs, which gives them little reason to be efficient. This order makes fixed-price contracts the standard, which helps control costs and holds companies accountable for results.
What does this order do?
Fixed-price contracts become the default
Requires government agencies to use fixed-price contracts as the standard method for buying goods and services to ensure predictable costs.
Requires senior approval for other contract types
Mandates that any non-fixed-price contract must be justified in writing, with agency head approval required for contracts over specific dollar amounts.
Sets approval thresholds for large contracts
Agency heads must approve non-fixed-price contracts over $100M for the Department of War, $35M for NASA, $25M for DHS, and $10M for other agencies.
Exempts emergencies and R&D
Allows for non-fixed-price contracts without senior approval for emergency responses and for research and development of major systems.
Orders review of existing large contracts
Directs agencies to review their 10 largest non-fixed-price contracts and try to renegotiate them to include fixed prices and performance goals.
Mandates new reporting to OMB
Requires agency heads to report every six months to the Office of Management and Budget on all non-fixed-price contracts they have approved.
Updates federal purchasing rules
Directs the Federal Acquisition Regulatory Council to propose changes to the Federal Acquisition Regulation to match the new policy within 120 days.
Who does this affect?
- Federal government agencies
- Government contractors
- Taxpayers
What is the real world impact?
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Increases taxpayer value
Aims to save money by preventing cost overruns on government projects. It shifts the financial risk from the government to the contractor, encouraging them to be more efficient.
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Improves contractor accountability
Ties payment to performance and clear results. This makes it easier to hold companies responsible if they don't deliver what was promised on time.
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May limit flexibility and innovation
Critics might argue that forcing fixed-price contracts could be bad for complex projects where the final outcome isn't clear from the start. This could discourage companies from taking on innovative but risky government work.
When does this start?
This order takes effect on April 30, 2026, and sets several deadlines for agencies to follow.
OMB implementation guidance
Within 45 days of April 30, 2026, the Director of OMB must issue guidance to agencies on how to implement this order.
Agency review of large contracts
Within 90 days of April 30, 2026, each agency must review and attempt to renegotiate its 10 largest non-fixed-price contracts.
First report to OMB
No later than 90 days after April 30, 2026, agencies must submit their first semi-annual report on non-fixed-price contracts to the OMB.
Proposed changes to federal rules
Within 120 days of April 30, 2026, the Administrator for Federal Procurement Policy must propose amendments to the Federal Acquisition Regulation.
New training program development
Within 120 days of April 30, 2026, a new training program for government employees on using fixed-price contracts must be developed.