President Trump Signs Executive Order Prioritizing Fixed-Price Federal Contracts

President Donald Trump signed an executive order on April 30, 2026, directing federal agencies to prioritize fixed-price and performance-based contracts, according to a White House fact sheet. The order seeks to ensure timely and complete project delivery in federal procurements.

The directive applies to all federal agencies involved in contracting, which manage billions of dollars in annual spending funded by taxpayers. This spending occurs across sectors including defense, infrastructure, and services. Public records indicate that federal contract spending exceeded $600 billion in fiscal year 2023, affecting thousands of contractors and subcontractors across the United States.

Previously, federal agencies frequently used cost-reimbursement contracts that permitted expense overruns without strong ties to performance, as described in the fact sheet. The new order requires agencies to favor fixed-price models, where contractors assume more risk for delays or failures.

Implementation begins immediately, with agencies required to review their contracting strategies to align with this preference, moving from cost-focused to performance-driven approaches.

The change will trigger reviews of procurement policies at the agency level, which may accelerate contract awards by emphasizing outcomes over open-ended funding. Agencies must report on their adoption of these contract types, potentially influencing future budget allocations through congressional appropriations processes.

Markets for government contractors could adjust as firms adapt to higher accountability standards, with the Office of Management and Budget expected to oversee compliance using existing federal acquisition regulations.

The order builds on efforts from Trump's prior administration to streamline federal operations, including 2017 directives on regulatory reform. Congress has considered related legislation, such as amendments to the Federal Acquisition Streamlining Act, to establish preferences for performance-based contracting.