Executive Order 14402: Promoting Efficiency, Accountability, and Performance in Federal Contracting

The President signed an executive order on April 30, 2026, directing federal executive branch departments and agencies to use fixed-price contracts as the default method for government procurement.

The order, published May 5, 2026, states that federal procurement has tolerated unpredictable costs, bloated overhead and weak performance incentives. According to the document, a review identified about $120 billion obligated on cost-reimbursement consulting contracts alone in fiscal year 2024.

Under the order, a contracting officer must justify the use of any non-fixed-price contract in writing to the agency head. Agency heads must provide written approval for non-fixed-price contracts that exceed specific value thresholds, though they may delegate this authority to non-career employees.

The requirements for agency-head approval of high-value non-fixed-price contracts and the review of the largest contracts do not apply to contracts supporting response to an emergency, major disaster or contingency operation. These requirements also exempt contracts involving research and development or pre-production development for major systems acquisitions.

Within 90 days of the order, agency heads must review and seek to restructure or renegotiate their 10 largest non-fixed-price contracts to facilitate fixed prices and performance-based incentives. Each agency head must also report semi-annually to the director of the Office of Management and Budget on approved non-fixed-price contracts, with the first report due no later than 90 days after the order’s date.

The order directs the director of the Office of Management and Budget to issue implementation guidance within 45 days. Within 120 days, the Administrator for Federal Procurement Policy must propose amendments to the Federal Acquisition Regulation and develop training programs for contracting employees on managing fixed-price contracts.