Promoting Efficiency, Accountability, and Performance in Federal Contracting

The American people expect their Government to operate with integrity, efficiency, and transparency. For too long, Federal procurement has tolerated unpredictable costs, bloated overhead, and weak performance incentives. The United States Government must adopt the best business practices to protect taxpayer dollars, hold contractors accountable, and achieve demonstrable returns on investment. Many private-sector contracts focus on driving performance rather than ever-increasing costs, often dictating a fixed cost for a well-defined outcome. Fixed-price contracts are characterized by clearly defined outcomes and deliverables on predictable timelines for fixed prices that generally are not adjusted based on contractors' costs, and often tie profit to the contractors' performance, rewarding work that exceeds expectations and penalizing subpar performance. This performance-based model

(a) To the maximum extent consistent with law, and except as provided in subsection (b) of this section, executive branch departments and agencies (agencies) shall, in procurement, utilize fixed-price contracts, which for purposes of this order shall mean fixed-price contracts as defined in Part 16 of the Federal Acquisition Regulation, codified at title 48, Code of Federal Regulations, or contracts that tie profit to performance-based metrics when appropriate. (b)(i) Use of any non-fixed-price contract, including a cost-reimbursement contract, a time-and- material contract, a labor-hour contract, or any other non-fixed-price type of contract under Part 16 of the Federal Acquisition Regulation, must be justified in writing by the contracting officer to the agency head. [[Page 24326]] (ii) If the value of a non-fixed-price contract, or in the case of a hybrid contract, the value of the

(a) Within 45 days of the date of this order, the Director of OMB shall issue guidance to agencies to ensure consistent implementation of this order. (b) Within 120 days of the date of this order, the Administrator for Federal Procurement Policy shall: (i) propose, in coordination with the Federal Acquisition Regulatory Council, amendments to the Federal Acquisition Regulation, consistent with the policy in section 1 of this order; and [[Page 24327]] (ii) develop, in coordination with Defense Acquisition University and the Federal Acquisition Institute, a program that agencies shall use to train program and contracting employees on the formation, use, negotiation, and management of fixed-price contracts to minimize exceptions from section 2(a) of this order.