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On April 30, 2026, President Trump signed another&nbsp;<a href="https://www.whitehouse.gov/presidential-actions/2026/04/promoting-efficiency-accountability-and-performance-in-federal-contracting/">executive order</a>&nbsp;(“EO”) that may significantly impact how the government buys goods and services. The target: cost-reimbursement contracts, which let contractors bill the government for their “allowable, allocable, and reasonable” costs incurred, plus some pre-established or earnable profit. According to the EO, in Fiscal Year 2024, the government spent roughly&nbsp;$120 billion&nbsp;on cost-reimbursement consulting contracts. The EO seeks to significantly reduce that figure by making&nbsp;fixed-price contracts the default&nbsp;for federal procurement—meaning prices are locked in up front and contractors, not taxpayers, bear the risk of overruns.

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What does the executive order require agencies to do?

Agencies that want to use structures other than fixed-price will begin to face real hurdles as agencies implement the EO’s directives. Nearly every exception from the “default” fixed-price model will require the contracting officer to provide written justification not just to someone senior within the contracting authority, but to the head of the relevant agency, and bigger-ticket exceptions—at thresholds of $100 million (Department of Defense (“DoD”)), $35 million (National Aeronautics and Space Administration), $25 million (Department of Homeland Security), and $10 million (everyone else)—need the agency head’s sign-off, not just notification.

To read the full post, please visit our&nbsp;<a href="https://governmentcontractsnavigator.com/2026/05/04/is-this-the-end-of-cost-type-contracting-what-federal-contractors-should-know-about-a-new-executive-order-making-fixed-price-contracts-the-default/">Government Contracts Navigator</a>&nbsp;blog.

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Is This the End of Cost-Type Contracting? What Federal Contractors Should Know About a New Executive Order Making Fixed-Price Contracts the “Default”

Is This the End of Cost-Type Contracting? What Federal Contractors Should Know About a New Executive Order Making Fixed-Price Contracts the “Default”

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Is This the End of Cost-Type Contracting? What Federal Contractors Should Know About a New Executive Order Making Fixed-Price Contracts the “Default”

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