Trump Administration Seeks to Streamline Federal Procurement

Between April 9 and April 16, President Trump issued three executive orders (EOs) calling for reforms to the federal procurement system. The April 9 EO, “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base,” requires the Department of Defense (DoD) to reform the defense acquisition system. The April 15 EO, “Restoring Common Sense to Federal Procurement,” orders wholesale revision of the Federal Acquisition Regulation (FAR). The April 16 EO, “Ensuring Commercial, Cost-Effective Solutions in Federal Contracts,” directs executive agencies to procure commercial products and services to the maximum extent possible (as opposed to government-specific products and services).

Key Takeaways

The EOs call for a major overhaul of federal procurement processes and contract oversight, including:

• Requiring the Secretary of Defense to submit a plan to the President to expedite DoD procurements, including by providing a first preference for commercial solutions and a general preference for Other Transactions Authority (OTA), and requiring DoD to apply these preferences immediately to all pending and future procurements.
• Requiring the Secretary of Defense to review all major defense acquisition programs (MDAPs) and recommend to the Office of Management and Budget (OMB) cancelling programs that are behind schedule, over budget, unable to meet key performance objectives, or inconsistent with current agency priorities.
• Requiring the Administrator of the Office of Federal Procurement Policy with the Federal Acquisition Regulatory Council (FAR Council) to revise the FAR so that the FAR only includes provisions required by law or that are needed to make the procurement process simple, usable and efficient, or to protect economic or national security interests.
• Requiring federal agencies to review open agency solicitations, pre-solicitation notices, solicitation notices, award notices and sole source notices for non-commercial products or services and determine whether commercial products and services are available to meet the agency’s needs and to justify the use of non-commercial procurements.
• The major reforms outlined in these EOs create opportunities and risks for government contractors. We expect DoD and other federal departments and agencies will implement changes to the FAR and DFARS through interim rules and deviations while the final changes are promulgated.

EO 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base

This EO requires the Secretary of Defense to submit a plan to the President to reform the DoD acquisition process within 60 days of the EO (by June 8, 2025). That plan must incorporate “a first preference for commercial solutions.” Unique to the DoD, the plan must also contain a general preference for OTA agreements,¹ Rapid Capabilities Office² mechanisms and any other authorities or pathways under the Adaptative Acquisition Framework³ to promote streamlined acquisitions. Notably, the DoD must apply these priorities to all pending and future DoD contracting actions (including while the report is being developed and considered). Additionally, the plan must include a “review of each functional support role in the acquisition workforce” with the goals of eliminating unnecessary tasks and duplicative approvals and centralizing decision making, as well as a process for managing risk for acquisition programs through a formal Configuration Steering Board.⁴

Second, the EO tasks the Secretary of Defense with overseeing the review of current DoD procurement regulations⁵ and internal guidance and with proposing revisions, as appropriate, to expedite and streamline procurement processes. Similarly, within 180 days of the EO (by October 6, 2025), DoD must conduct a comprehensive review of the Joint Capabilities Integration and Development System⁶ aimed at streamlining and accelerating acquisition. These actions are generally consistent with EOs 14275 and 14271, which were issued a week later (summarized below).

Third, the EO directs the Secretary of Defense to submit to the President, within 120 days of the EO (by August 7, 2025), a plan to reform the acquisition workforce. Among other things, the plan must include “policies, procedures and tools to incentivize acquisition officials to, in good faith, utilize innovative acquisition authorities and take measured and calculated risks.”

Fourth, the EO directs the Secretary of Defense to review all major defense acquisition programs (MDAPs)⁷ within 90 days of the order (by July 8, 2025). MDAPs may be cancelled if (1) they are over 15% behind schedule based on the current Acquisition Program Baseline (APB),⁸ (2) they are 15% over cost according to the APB, (3) they are unable to meet key performance parameters, or (4) they are not aligned with the mission and priorities of the DoD. The Secretary of Defense must also provide the Director of OMB with a list of all MDAP contracts and their performance against the original approved cost estimates on the same timeline. Following the MDAP review, the Secretary of Defense will create a plan for reviewing all remaining major systems.

This EO is aligned in purpose and approach with memoranda issued by the Secretary of Defense related to the acquisition of software. A March 6 memorandum requires DoD entities to “adopt the Software Acquisition Pathway (SWP) as the preferred pathway for all software development components of business and weapon system programs” and to use Commercial Solutions Openings⁹ and OTA agreements “as the default solicitation and award approaches for acquiring capabilities under the SWP.” An April 10 memorandum announces the termination of several IT consulting services contracts and directs a DoD team to, within 30 days (by May 10, 2025), prepare a plan for how DoD will (1) in-source IT consulting and management services to its civilian workforce and (2) negotiate most favorable customer rates for software and cloud services. The memorandum also requires the DoD team to audit DoD software licenses to establish whether DoD needs all of the software and is paying the most favorable rates.

EO 14275, Restoring Common Sense to Federal Procurement

This EO directs the OFPP Administrator, working with the FAR Council, heads of agencies, and agency senior acquisition and procurement officials, to amend the FAR within 180 days (by October 12, 2025) “to ensure that it contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”¹⁰ Moreover, for any FAR provisions that are retained (or later added) that are not required by statute, the EO instructs the OFPP Administrator and the FAR Council to consider incorporating a “sunset” clause that would provide for the provisions to expire after four years unless the FAR Council renews them. The OFPP Administrator and FAR Council are also directed to issue deviation and interim guidance to apply in the period before final rules reforming the FAR are published.

The EO also requires agencies to designate senior procurement officials to work on the FAR reform effort and make recommendations for aligning agency FAR supplements. The EO further states that OMB will issue guidance for implementing the revision of the FAR and alignment of changes to the FAR and changes to agency supplements.

An April 16 White House press release calls the reform effort a “long-overdue Revolutionary FAR Overhaul (RFO).” The release further clarifies that the reform will entail—not just removal of provisions, as specified in the EO—but a “rewrite” of the FAR “in plain English” as well as the addition of “buyer guides in place of burdensome and outdated requirements.” The release also notes that a new website will be created to inform the public on regulatory updates, buyer guides and the overall procurement process.¹¹

EO 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

This EO describes how previous administrations “evaded statutory preferences,” like the commercial item preference in the Federal Acquisition Streamlining Act (FASA), by procuring “custom products and services where a suitable or superior commercial solution would have fulfilled the Government’s needs” thereby “resulting in avoidable waste and costly delays to the detriment of American taxpayers.” The EO announces a policy that all agencies must “procure commercially available products and services, including those that can be modified to fill agencies’ needs, to the maximum extent practicable.”¹²

 The EO requires agency contracting officers (COs) to obtain approval before proceeding with a pending procurement for non-commercial products or services. Within 60 days of the order (by June 15, 2025), COs must identify “all open agency solicitations, pre-solicitation notices, solicitation notices, award notices, and sole source notices for non-commercial products or services.” For any non-commercial products or services identified, the CO must obtain approval to proceed with the solicitation. Applications must provide a rationale for pursuing the non-commercial items or services, as well as supporting market research and price analysis. The agency approval must review any application it receives within 30 days for compliance with FASA and recommend whether to advance the solicitation of commercial products or services where those products or services would be sufficient to serve the applicable procurement needs. COs must follow this same process moving forward. The EO also requires that agency approval authorities submit a report to the director of OMB within 120 days of the EO (by August 7, 2025) and annually thereafter that describes the agency’s compliance with FASA and its progress toward implementing the policies of the EO.

What Is the Impact of These Executive Orders?

We expect to see major changes to how the federal government procures products and services. We may see procurements being conducted more quickly with more flexibility around how contracts are solicited, awarded and negotiated. At the same time, the preference for commercial items means that companies and COs will need to justify the need for solicitation and acquisition of customized products. It is not clear how the amendments to the FAR and preference for commercial products and OTA agreements will impact the ability of companies to protest procurement decisions. These changes are being made on a short timeline, with some of the changes effective immediately. It is also unclear how the intended broader use of OTA agreements will be implemented as the DoD’s statutory OTA authority¹³ is limited to Research & Development (R&D), prototype and follow-ons to the prototypes.

Notably, the practical impact of these changes may be more limited than it might seem. For example, many significant provisions in the FAR do in fact implement statutory requirements (e.g., Buy American Act, Trade Agreements Act, Davis-Bacon Act, Truthful Cost or Pricing Data Act, Small Business Act and the Contract Disputes Act, to name a few). These requirements will accordingly be retained in the FAR under EO 14275. Moreover, under laws predating these EOs, the government was already required by statute to preference commercial contracts over non-commercial contracts. With that said, the requirement to provide written justification for non-commercial procurements is new, as is, as stated above, the DoD preference for OTA agreements.

Agencies will make short-term changes to the FAR through deviations and interim guidance. Contractors should accordingly watch for communications from COs and monitor the “FAR Overhaul Page” on “acquisition.gov” for changes that could impact current government contracts and solicitations. When issuing the final rules reforming the FAR, the government is required under statute to follow a notice-and-comment procedure.¹⁴ Given the scale of the current reform effort, this could create the unique opportunity to provide input on almost any topic related to government procurements (which are generally covered in the FAR).¹⁵ This may include topics that have not been subject to industry input since the FAR was first promulgated. Even where a requirement is derived from statute, the precise wording of a FAR provision can make a meaningful difference to compliance obligations. Therefore, government contractors will also want to timely review proposed FAR provisions (which should be published in the Federal Register and may also be posted on the “FAR Overhaul Page”) and be prepared to comment on provisions that significantly impact their business.

^{1 OTA agreements are agreements with the federal government that are not standard contracts, grants or cooperative agreements, and therefore OTA agreements are not subject to FAR or regulations applicable to financial assistance agreements.}

^{2 The EO defines the term Rapid Capabilities Office as “the Army Rapid Capabilities and Critical Technologies Office, Naval Air Warfare Rapid Capabilities Office, Department of the Air Force Rapid Capabilities Office, or Space Force Rapid Capabilities Office.”}

^{3 The EO defines the term Adaptive Acquisition Framework as “the series of acquisition pathways that enable the workforce to deliver ‘effective, suitable, survivable, sustainable, and affordable solutions to the end user in a timely manner,’ as stated in Department of Defense Instruction 5000.02.”}

^{4 The EO defines the term Configuration Steering Board as “an annual review of potential requirements changes, critical intelligence parameter changes, and any significant technical configuration changes as described in Department of Defense Instruction 5000.85.”}

^{5 The regulations to be reviewed explicitly include the Defense Federal Acquisition Regulation Supplement (DFARS) and Financial Management Regulation.}

^{6 The term Joint Capabilities Integration and Development System means “the formally established Department of Defense process used to identify, assess, and prioritize joint military capability requirements across the Department of Defense.”}

^{7 An MDAP is generally a program that is not a highly sensitive classified program that is estimated to require more than $300 million in expenditures for research, developing, test and evaluation or more than $1.8 billion for procurement. 10 U.S.C. § 4201.}

^{8 The EO defines Acquisition Program Baseline as “the formally established cost, schedule, and performance baselines of a program, as described in Department of Defense Instruction 5000.85.”}

^{9 The Commercial Solutions Opening (CSO) program allows for a streamlined solicitation procedure when the federal government seeks to acquire innovative commercial products. The CSO process can result in traditional FAR-based contracts or OTA agreements.}

^{10 Emphasis added.}

^{11 Acquisition.gov similarly notes that a Revolutionary FAR Overhaul Page is coming soon.}

^{12 Emphasis added.}

^{13 10 U.S.C. § 4021.}

^{14 41 U.S.C. § 1707.}

^{15 Some aspects of the Section 1707 notice-and-comment procedure are waivable under certain circumstances (including, for example, the requirement that provisions become effective 60 or more days after publication), but the 30-day comment period is not.}