Presidential DocumentExecutive Order 144022026-08900
Promoting Efficiency, Accountability, and Performance in Federal Contracting
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Published
May 5, 2026
Signed
April 30, 2026
Issuing agencies
Executive Office of the President
Full Text
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<title>Federal Register, Volume 91 Issue 86 (Tuesday, May 5, 2026)</title>
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[Federal Register Volume 91, Number 86 (Tuesday, May 5, 2026)]
[Presidential Documents]
[Pages 24325-24327]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08900]
Presidential Documents
Federal Register / Vol. 91 , No. 86 / Tuesday, May 5, 2026 /
Presidential Documents
[[Page 24325]]
Executive Order 14402 of April 30, 2026
Promoting Efficiency, Accountability, and
Performance in Federal Contracting
By the authority vested in me as President by the
Constitution and the laws of the United States of
America, it is hereby ordered:
Section 1. Purpose. The American people expect their
Government to operate with integrity, efficiency, and
transparency. For too long, Federal procurement has
tolerated unpredictable costs, bloated overhead, and
weak performance incentives. The United States
Government must adopt the best business practices to
protect taxpayer dollars, hold contractors accountable,
and achieve demonstrable returns on investment.
Many private-sector contracts focus on driving
performance rather than ever-increasing costs, often
dictating a fixed cost for a well-defined outcome.
Fixed-price contracts are characterized by clearly
defined outcomes and deliverables on predictable
timelines for fixed prices that generally are not
adjusted based on contractors' costs, and often tie
profit to the contractors' performance, rewarding work
that exceeds expectations and penalizing subpar
performance. This performance-based model encourages
contractors to control costs and expeditiously meet
deliverables to maximize profits. Many Government
contracts, however, operate on what is known as a
``cost-reimbursement'' model. Under that model,
Government contractors are guaranteed reimbursement for
their allowable incurred costs, and may receive profit
margins on top of expenses. Cost-reimbursement
contracts frequently allow for poorly defined product
or service deliverables and increase the Government's
exposure to overspending by providing little incentive
to control costs.
A review of spending across the Government in Fiscal
Year 2024 identified approximately $120 billion
obligated on cost-reimbursement consulting contracts
alone. While there are circumstances in which cost-
reimbursement contracting is appropriate, such as
research and the pre-production developmental phase of
major systems acquisition, it should be the exception,
granted only in limited circumstances and with
appropriate senior-level accountability at the agency.
To ensure that Government contracts incentivize
performance rather than cost inflation, it is the
policy of my Administration that fixed-price contracts
with performance-based considerations should serve as
the default and preferred method of procurement in
order to advance cost predictability and budget
discipline, appropriate contractor incentives and
accountability, and streamlined procurement and
contract administration.
Sec. 2. Default to Fixed-Price Contracting. (a) To the
maximum extent consistent with law, and except as
provided in subsection (b) of this section, executive
branch departments and agencies (agencies) shall, in
procurement, utilize fixed-price contracts, which for
purposes of this order shall mean fixed-price contracts
as defined in Part 16 of the Federal Acquisition
Regulation, codified at title 48, Code of Federal
Regulations, or contracts that tie profit to
performance-based metrics when appropriate.
(b)(i) Use of any non-fixed-price contract,
including a cost-reimbursement contract, a time-and-
material contract, a labor-hour contract, or any other
non-fixed-price type of contract under Part 16 of the
Federal Acquisition Regulation, must be justified in
writing by the contracting officer to the agency head.
[[Page 24326]]
(ii) If the value of a non-fixed-price contract, or in the case of a hybrid
contract, the value of the non-fixed-price portion of the contract, exceeds
the following value, then the agency head must approve the contract in
writing:
(A) $100 million, in the case of a Department of War contract;
(B) $35 million, in the case of a National Aeronautics and Space
Administration contract;
(C) $25 million, in the case of a Department of Homeland Security
contract; or
(D) $10 million, in the case of a contract involving an agency other than
the Department of War, the Department of Homeland Security, or the National
Aeronautics and Space Administration.
(iii) Agency heads may delegate approval under subsection (b)(ii) of this
section to appropriate non-career employees within the agency.
(iv) Subsection (b)(ii) of this section shall not apply to contracts that:
(A) support response to an emergency, major disaster, or contingency
operation as defined in Part 2 of the Federal Acquisition Regulation; or
(B) involve research and development or pre-production development for
major systems acquisition, as governed by Parts 34-35 of the Federal
Acquisition Regulation.
(c)(i) Within 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 (including non-
fixed-price contracts entered into on behalf of another
agency) to facilitate use of fixed prices and
performance-based incentives for contract deliverables
to the maximum extent practicable.
(ii) Subsection (c)(i) of this section shall not apply to contracts that
involve research and development or pre-production development for major
systems acquisition, as governed by Parts 34-35 of the Federal Acquisition
Regulation, or contracts that support response to an emergency, major
disaster, or contingency operation as defined in Part 2 of the Federal
Acquisition Regulation.
(d) Each agency head shall report semi-annually to
the Director of the Office of Management and Budget
(OMB) the number of, value of, and written
justifications for, any non-fixed-price contracts
approved under subsection (b) of this section. Agency
heads shall submit the first report no later than 90
days after the date of this order. As part of the first
report, agency heads shall identify opportunities,
beyond the contracts identified in subsection (c) of
this section, for adjusting current non-fixed-price
contracts toward fixed-price contracts.
(e) The requirements in this section apply, to the
maximum extent practicable, whether an agency is
entering into contracts on its own behalf or on behalf
of another agency.
(f) When necessary to comply with the provisions of
this section before the amendments contemplated by
section 3(b) of this order are completed, agencies
shall utilize applicable deviations from provisions of
the Federal Acquisition Regulation, to the maximum
extent practicable.
Sec. 3. Implementation. (a) Within 45 days of the date
of this order, the Director of OMB shall issue guidance
to agencies to ensure consistent implementation of this
order.
(b) Within 120 days of the date of this order, the
Administrator for Federal Procurement Policy shall:
(i) propose, in coordination with the Federal Acquisition Regulatory
Council, amendments to the Federal Acquisition Regulation, consistent with
the policy in section 1 of this order; and
[[Page 24327]]
(ii) develop, in coordination with Defense Acquisition University and the
Federal Acquisition Institute, a program that agencies shall use to train
program and contracting employees on the formation, use, negotiation, and
management of fixed-price contracts to minimize exceptions from section
2(a) of this order.
Sec. 4. Severability. If any provision of this order,
or the application of any provision to any person or
circumstance, is held to be invalid, the remainder of
this order and the application of its provisions to any
other persons or circumstances shall not be affected
thereby.
Sec. 5. General Provisions. (a) Nothing in this order
shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or
the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget
relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with
applicable law and subject to the availability of
appropriations.
(c) This order is not intended to, and does not,
create any right or benefit, substantive or procedural,
enforceable at law or in equity by any party against
the United States, its departments, agencies, or
entities, its officers, employees, or agents, or any
other person.
(d) The costs for publication of this order shall
be borne by the Office of Management and Budget.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
(Presidential Sig.)
THE WHITE HOUSE,
April 30, 2026.
[FR Doc. 2026-08900
Filed 5-4-26; 11:15 am]
Billing code 3110-01-P
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</html>Indexed from Federal Register on May 5, 2026.
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