On April 30, 2026, President Trump issued an Executive Order (EO) titled, “Promoting Efficiency, Accountability, and Performance in Federal Contracting.”  This EO directs agencies to make fixed-price contracts the default form of contracting, and requires agency officials to execute written justifications to use other forms of contracting.  Of particular note for large contractors, the EO directs that, “[w]ithin 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 . . . to facilitate use of fixed prices and performance-based incentives for contract deliverables to the maximum extent practicable.”

The EO states that fixed-price contracts with performance-based incentives are preferred over cost-reimbursement contracts because fixed-price contracts encourage contractors to control costs and efficiently meet deliverables.  It therefore directs that “that fixed-price contracts with performance-based considerations should serve as the default and preferred method of procurement.”

To that end, contracting officers must justify in writing the use of any non-fixed-price contract to the agency head.  If the value of the contract exceeds certain thresholds, then the agency head must approve the contract in writing, unless the contract falls into one of two exempted categories:  (1) support for emergency response, disaster relief, or contingency operations; or (2) research and development or pre‑production development for major systems acquisition.

Additionally, “[w]ithin 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 . . . to facilitate use of fixed prices and performance-based incentives for contract deliverables to the maximum extent practicable.”  The same two categories of contracts are exempt from this direction.

The EO also directs agency heads to submit a semi-annual report to the Director of the Office of Management and Budget (OMB) that includes the number of, value of, and written justification for, any non-fixed-price contracts approved by the agency.

Finally, the EO directs OMB to issue guidance to agencies within 45 days of the order, and the Office of Federal Procurement Policy to propose Federal Acquisition Regulation amendments within 120 days of the order. 

We’ll see how this plays out, but contractors should be prepared for an increased push by federal agencies to use fixed-price contracts.