Trump Order Pushes Fixed-Price Contracts as Default for Federal Procurement

MT Newswires Live05-01 06:56

President Donald Trump has signed an executive order directing U.S. agencies to prioritize fixed-price contracts over cost-reimbursement models, aiming to curb overspending and improve accountability in federal procurement.

The order requires agencies to justify any use of non-fixed-price contracts in writing, with senior-level approvals mandated for larger contracts exceeding specified thresholds.

It also calls for agencies to review and potentially renegotiate their 10 largest non-fixed-price contracts within 90 days to incorporate fixed pricing and performance-based incentives where feasible.

The White House said the move is intended to promote cost predictability, reduce waste, and align contractor incentives with performance, citing about $120 billion spent on cost-reimbursement consulting contracts in fiscal 2024.

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