Executive Order Changes Federal Contracting Policy
On April 30, 2026, President Donald Trump (R) issued an executive order which modified how the federal government structures government contracts. The order directed agencies to preferentially use fixed-price performance-based contracts rather than cost-reimbursement contracts.
In a fixed-price contract, a contractor delivers goods or services to the government at a set price. In a cost-reimbursement contract, a contractor delivers goods or services at a price based on the cost of doing so, plus a profit margin. According to the order, federal agencies spent about $120 billion on cost-reimbursement contracts in the 2024 fiscal year. The federal government spent about $755 billion on all contracts in that fiscal year, according to the Government Accounting Office.
