The short answer: The April 30, 2026 executive order — "Promoting Efficiency, Accountability, and Performance in Federal Contracting" — makes fixed-price contracts with performance-based considerations the default and preferred method of federal procurement. Agencies have 90 days (roughly July 29, 2026) to review their 10 largest cost-type contracts and move them toward fixed-price to the maximum extent practicable, and new non-fixed-price awards above $10M ($100M Department of War, $35M NASA, $25M DHS) now need agency-head written approval.
Contract-type selection has always been one of the most consequential judgment calls a contracting officer makes — FAR Part 16 gives you a toolbox, and the choice shapes risk allocation, pricing, administration burden, and the clause matrix for the life of the contract. This executive order puts a heavy thumb on the scale, and it comes with a deadline that is now weeks away.
The core policy statement is blunt: fixed-price contracts with performance-based considerations should serve as the default and preferred method of procurement. The order's rationale is the classic case against cost-type vehicles — that cost-reimbursement models permit poorly defined deliverables and increase the government's exposure to overspending.
Note the repeated qualifier: "to the maximum extent practicable." This is not a flat ban on cost-type contracting. It changes the default, raises the approval bar, and adds reporting friction — but where a cost-reimbursement vehicle is genuinely the right fit (immature requirements, unknowable risk), the pathway still exists. It just now runs through the agency head's desk.
The instinct behind the order — pay for outcomes, not effort — is textbook procurement policy. The hard part is that fixed-price only works when the requirement is well-defined and the price is right. A fixed-price contract on a vague statement of work doesn't eliminate risk; it relocates it into disputes, claims, and requests for equitable adjustment.
Converting an existing cost-type contract is harder still. The parties priced that work under one risk allocation; moving it to fixed-price mid-stream means renegotiating scope, re-pricing with a contractor who now bears cost risk (and will price that risk in), and papering the modification defensibly. Expect contractors to sharpen their pencils — and expect the negotiation to turn on how well the government can independently estimate what the work should cost.
Under cost-reimbursement, a weak government estimate is survivable — actuals get reconciled as the work proceeds. Under fixed-price, the government's pricing homework happens before award and it is largely final. A defensible, decomposed Independent Government Cost Estimate — real labor categories, current rates, itemized materials, documented assumptions — is the anchor for every fixed-price negotiation this order forces.
Performance-based fixed-price contracting presumes measurable outcomes. Requirements that were tolerably fuzzy under T&M must now be written tightly enough that both parties can price them — which puts a premium on requirements development up front.
Moving an acquisition from T&M to FFP is not just a pricing change — it changes which clauses belong in the contract. The T&M payment clause (FAR 52.232-7) and its associated administration terms drop out; the fixed-price family comes in. Every conversion this order drives is also a clause-matrix review, in a year when the FAR Overhaul is already reshuffling clause selection.
"Maximum extent practicable" is a documentation standard as much as a policy one. Where a cost-type vehicle remains the right answer, the file needs to show why — and above the thresholds, that justification is going to the agency head and into a semi-annual OMB report.
The April 30, 2026 order, "Promoting Efficiency, Accountability, and Performance in Federal Contracting," makes fixed-price contracts with performance-based considerations the default and preferred method of federal procurement. It requires agencies to review their 10 largest cost-type contracts within 90 days, imposes agency-head approval thresholds on new non-fixed-price awards, and directs OMB guidance and proposed FAR amendments to implement the policy.
The order gives agencies 90 days from its April 30, 2026 signing — roughly July 29, 2026 — to review their 10 largest cost-type contracts (cost-reimbursement, time-and-materials, and labor-hour) by dollar value and move them toward fixed-price, performance-based arrangements to the maximum extent practicable.
New non-fixed-price contracts above certain values require written agency-head approval: $100 million for the Department of War, $35 million for NASA, $25 million for DHS, and $10 million for all other agencies — with semi-annual reporting to OMB on the approvals granted.
Yes — research and development and pre-production development for major systems, plus emergency and contingency operations. The order's mandates are also qualified by "to the maximum extent practicable," so cost-type contracting remains available where it is genuinely the right fit, with a higher approval and documentation bar.
Fixed-price moves pricing risk to the front of the acquisition — the government must get the price right before award, making a defensible IGCE and a tight statement of work far more consequential. Contract type also drives the clause matrix: converting from T&M to FFP changes which payment and administration clauses apply. ArcPrice (IGCE building) and ArcClause (clause matrices) are free tools for both.