Trump signs executive order making fixed-price contracts the default for federal procurement
Primary region US
Tags Policy · Political economy
Regions US
On April 30, 2026, President Trump signed an Executive Order titled 'Promoting Efficiency, Accountability, and Performance in Federal Contracting.' The EO mandates that fixed-price contracts with performance-based incentives become the default and preferred method of procurement across all federal agencies. Cost-reimbursement contracts, which accounted for roughly $120 billion obligated in FY2024, are now permitted only in limited circumstances with written justification from agency heads. Each agency must review and attempt to modify, restructure, or renegotiate its ten largest non-fixed-price contracts within 90 days. The order continues Trump's broader procurement reform agenda including simplifying the Federal Acquisition Regulation and eliminating DEI requirements for federal contractors.
Strategic interpretation
The EO represents a structural shift in how the federal government buys goods and services, transferring cost risk from taxpayers to contractors. While it may reduce cost overruns on major programs, it could also reduce the pool of companies willing to bid on complex government work. The order aligns with Trump's broader deregulatory agenda and signals to the business community that procurement reform is a second-term priority.