Published 2026 | TIKC NewsWire
The checkpoint has passed. As of July 29, 2026, the 90-day deadline under Executive Order 14402 came due — the date by which every agency head had to review, and “to the maximum extent practicable” seek to modify, restructure, or renegotiate, the agency’s 10 largest non-fixed-price contracts toward fixed-price with performance-based incentives. July 29 was also the deadline for the first semi-annual report to OMB on non-fixed-price approvals.
What the Order Actually Does
It makes firm-fixed-price (FFP) the default, preferred contract type governmentwide. Any non-fixed-price contract now requires a written justification. Above set thresholds, the agency head must personally approve it, and that approval can only be delegated to non-career (political) appointees. Thresholds run from over $10M for most agencies up to over $100M for the Department of Defense. R&D/major-systems and emergency/contingency contracts are exempt.
Why It Matters If You Hold or Chase Cost-Reimbursement Work
- Conversion pressure is now live. With the review deadline behind them, agencies have compiled their target lists — expect contracting officers to open modification and renegotiation conversations on large cost-type vehicles in the coming weeks.
- The risk shifts to you. FFP places maximum cost risk on the contractor. Without an Economic Price Adjustment (EPA) clause, inflation and labor escalation come straight out of your margin. If you’re bidding or being asked to convert to multi-year FFP work, affirmatively request an EPA clause.
- 8(a) sole-source authority is untouched — but pricing strategy isn’t. Nothing in the EO changes 8(a) sole-source or set-aside authority. It does mean proposals will increasingly be structured FFP, so your JV agreements should spell out who carries overrun risk.
Contractors who build FFP pricing discipline into how they run federal work — not just how they bid it — are the ones who stay profitable. Brick by brick.
FAQ
Now that the deadline has passed, will my contract be converted automatically?
No. July 29 was when agencies had to complete the review and begin seeking conversion. Expect contracting officers to open modification or renegotiation discussions over the coming weeks.
I’m a subcontractor on an FFP prime — am I automatically FFP?
No. Subcontracts on an FFP prime aren’t automatically fixed-price, though primes commonly try to flow FFP terms down. Negotiate the structure that fits your scope.
Sources
Slottee, C. (2026, May 6). Fixed-price first: The new federal contracting mandate. Schwabe, Williamson & Wyatt.
PilieroMazza. (2026, July 9). Weekly update for government contractors and commercial businesses.
About the Author
Melanie Patterson
Founder & CEO of Team Integrity Knowledge Center and creator of GovCon iSource. Former nurse turned entrepreneur with over 10 years guiding small, women-owned, and minority-owned businesses to over $10 million in government awards. Build, grow, scale — brick by brick. Contact
