far/independent/
Trump EO makes fixed-price contracts the federal default
Large contractors have 90 days before agencies start renegotiating their biggest cost-reimbursement deals.
Editorial brief
An April 30 Executive Order directs agencies to treat fixed-price, performance-based contracts as the default procurement method and requires contracting officers to submit written justifications to use anything else. Above certain dollar thresholds, agency-head approval is required. The 90-day clock is the immediate pressure point: each agency must review its 10 largest non-fixed-price contracts by value and seek to modify, restructure, or renegotiate them. Two categories are exempt: emergency or contingency operations, and R&D or pre-production development for major systems. OMB guidance is due within 45 days; proposed FAR amendments within 120. Cost-reimbursement-heavy primes should expect renegotiation outreach before late July.
The April 30 EO is a direct challenge to the cost-reimbursement contracting model that has dominated large defense and civilian agency programs for decades. The order's logic is familiar (fixed-price contracts transfer cost risk to contractors, creating incentives to stay on schedule and on budget) but the mechanism here is more aggressive than prior reform efforts. Rather than merely encouraging fixed-price vehicles, the EO requires written justification for every deviation and agency-head sign-off above specified thresholds.
The 90-day review is the operative pressure
The most immediate consequence is the 90-day review of each agency's 10 largest non-fixed-price contracts by dollar value. "Modify, restructure, or renegotiate" is the directive. The qualifying language ("to the maximum extent practicable and consistent with law") gives agencies room to resist where existing contract terms, funded scope changes, or statutory requirements make conversion genuinely impractical. But contractors should not assume that language will be read generously across all agencies. Program offices under OMB reporting obligations have institutional incentives to show progress.
Who is and isn't affected
The two exemptions are narrow: support for emergency response, disaster relief, or contingency operations; and R&D or pre-production development for major systems acquisition. Large IT modernization vehicles, managed services contracts, and professional-services task orders sitting on cost-plus vehicles are not exempt. Those are the primes most likely to hear from contracting officers in the next 60 days.
What comes next procedurally
OMB has 45 days from April 30 to issue implementing guidance, that deadline is June 14. The Office of Federal Procurement Policy has 120 days to propose FAR amendments, putting a proposed rule around late August. Semi-annual reporting to OMB begins once the framework is in place. The FAR amendment process will determine how durably this EO reshapes contracting norms; executive orders without FAR implementation tend to fade at the agency level.
What to do now
Contractors with large cost-reimbursement contracts should identify which vehicles are most likely to fall inside the top-10 review at their major agency customers and assess conversion feasibility before the agency comes to them. Where conversion is genuinely impractical, document that case now: cost risk, technical uncertainty, evolving requirements, or statutory constraints. The written record will matter if the agency's justification process becomes a formal gatekeeping function under the eventual FAR rule.
Published ·Updated ·Deep Fathom