Executive Order: Promoting Efficiency, Accountability, and Performance in Federal Contracting

Key Takeaways

• 1.Section 2(a): Mandates fixed-price contracts as the default procurement method for all executive branch agencies, to the maximum extent consistent with law.
• 2.Section 2(b)(ii): Establishes dollar thresholds requiring agency head approval for non-fixed-price contracts ($100M for DoD, $35M for NASA, $25M for DHS, $10M for other agencies).
• 3.Section 2(c)(i): Requires each agency head to review and seek to modify their 10 largest non-fixed-price contracts within 90 days to convert them to fixed-price or performance-based structures.
• 4.Section 2(d): Mandates semi-annual reporting to OMB on all non-fixed-price contract justifications and approvals, with the first report due within 90 days.
• 5.Section 3(b): Directs the Administrator for Federal Procurement Policy to propose FAR amendments and develop a training program for fixed-price contract management within 120 days.

Market Implications

The shift to fixed-price contracting will compress margins for defense and government services contractors that rely on cost-plus models, while benefiting firms with strong cost-control and performance-based execution capabilities.

Full Analysis