Adjusting to fixed-price procurement as a GovCon organization.
On April 30, 2026, the White House issued Promoting Efficiency, Accountability, and Performance in Federal Contracting — an executive order that makes fixed-price contracting the default and preferred method of federal procurement. Cost-reimbursement, time-and-materials, and labor-hour contracts are now treated as exceptions, requiring written justification and, above certain thresholds, senior-level approval.
For GovCon manufacturers, this isn’t a theoretical policy shift. The clock is already running. OMB guidance is due within 45 days. Agencies must review and begin renegotiating their 10 largest non-fixed-price contracts within 90 days. Whether you primarily hold cost-type contracts today or you’re already operating on FFP work, the operating environment is changing fast — and the manufacturers who move first will be in a stronger position when the dust settles.
Here’s what to do now.
Audit your contract portfolio for renegotiation exposure
The EO directs every agency to identify and try to modify, restructure, or renegotiate its 10 largest non-fixed-price contracts. If you hold a cost-reimbursement, T&M, or labor-hour contract with a meaningful dollar value, assume your contracting officer will be having conversations about it — possibly soon.
- Build a portfolio map this month. For each active contract, document:
- Contract type (FFP, FPIF, CPFF, CPIF, T&M, LH, IDIQ, hybrid)
- Total value and remaining value
- Period of performance and remaining ordering periods
- Whether it falls under one of the EO’s exempt categories (emergency response, contingency operations, R&D or pre-production development for major systems under FAR Parts 34–35)
Anything that isn’t exempt and carries significant remaining value is a renegotiation candidate. You want to know — before your CO calls — which contracts you’d be willing to convert, which terms you’d insist on, and which you’d push back on because the requirement isn’t mature enough to price with confidence.
Pull your historical labor data and pressure-test your bid rates
Under cost-reimbursement, underestimating labor was painful but recoverable. Under fixed-price, it eats your margin directly. The single most important capability you can build in the next quarter is the ability to pull clean, defensible labor history by program, task, and labor category — and to use it to price new work accurately.
Specifically, your finance and proposal teams should be able to answer:
- What did this type of work actually take last time, in hours by labor category?
- How does our bid-to-actual variance trend on FFP work we’ve already won?
- Where are we systematically over- or under-estimating?
If pulling that data takes weeks, requires manual reconciliation, or produces numbers that don’t match what DCAA would see in a floor check, that’s the problem to solve first. Fixed-price wins or loses on the accuracy of the bid, and the bid is only as good as the historical data underneath it.
Don’t relax timekeeping discipline — tighten it
There’s a tempting misread of this EO that goes: fixed-price means the government doesn’t care how I track labor anymore. That’s wrong, and acting on it will cost you.
Three reasons timekeeping discipline matters more, not less, under this regime:
Hybrid portfolios are the new normal. Most manufacturers will run a mix of legacy cost-type contracts, new FFP work, and IR&D for years. DCAA-compliant timekeeping is what keeps labor distributed correctly across that mix. Cross-charging between contracts — even accidentally — is exactly the kind of finding that turns a routine audit into an unallowable cost determination.
TINA and CAS haven’t gone anywhere. The EO doesn’t eliminate the requirement to submit certified cost or pricing data, or to comply with Cost Accounting Standards where applicable. Your bid rates still have to be defensible. That defense rests on historical timekeeping records.
Performance-based incentives require labor visibility. When profit is tied to milestones, deliverables, and performance metrics, knowing in real time whether labor burn matches schedule isn’t a nice-to-have, it’s how you protect margin. The PMs who can see “we’re 60% through the budget at 40% of the schedule” early enough to act are the ones who hit their incentive fees.
If your timekeeping system can’t enforce daily entry, capture changes with a full audit trail, segregate direct from indirect labor cleanly, and produce floor-check-ready reports on demand, that’s a gap worth closing now — before your portfolio tilts further toward FFP.
Re-examine your indirect rate structure
Fixed-price doesn’t eliminate indirect rates. Overhead, fringe, and G&A still flow into the bid. What changes is how exposed you are to getting them wrong.
On a CPFF contract, an indirect rate variance gets reconciled at year-end through the incurred cost submission. On an FFP contract, it just becomes margin compression you absorb. As your portfolio shifts, your forward pricing rates need to be both accurate and current — and your provisional rates need to track actuals closely enough that you’re not surprised at year-end.
This is also a good moment to ask whether your pool and base structure still makes sense. A rate structure that worked when 80% of your work was cost-type may produce uncompetitive bids when 80% is fixed-price. Talk to your DCAA-experienced accountant or consultant about whether a restructuring is warranted.
Train your PMs to think like fixed-price operators
Cost-reimbursement project management and fixed-price project management are different disciplines. Cost-type PMs optimize for compliance and documentation; fixed-price PMs optimize for scope control, schedule, and burn rate. Many manufacturers have program managers who’ve spent their careers in one mode and are about to be asked to operate in the other.
Practical things to put in front of them now:
- How to read and act on labor burn-vs-schedule reports weekly, not monthly
- How to manage scope creep and document constructive changes when a customer asks for “just one more thing”
- How to escalate early when a fixed-price job is heading underwater
- How to coordinate with finance and contracts on requests for equitable adjustment
Get your compliance posture documented before the next audit cycle
DCAA’s mission doesn’t shrink under a fixed-price regime — it shifts. Expect more scrutiny on the front end: were proposed costs developed using sound estimating practices, were forward pricing rates supported, were prior incurred costs accurately reported? A clean, well-documented compliance posture is your best defense, and it’s also a competitive advantage when contracting officers are deciding who to trust with renegotiated work.
If you haven’t done a self-assessment of your DCAA compliance posture in the last 12 months, do one now. Know where your gaps are before someone else finds them.
The bottom line
This EO doesn’t change what good GovCon manufacturers have always known: that the businesses with disciplined timekeeping, accurate cost accounting, and tight program management win. It just raises the stakes on getting those things right. The next 120 days are when agency behavior, FAR text, and your own contract portfolio will start shifting in earnest. Use them.
Sources
- The White House, Promoting Efficiency, Accountability, and Performance in Federal Contracting (Executive Order, April 30, 2026)
- The White House, Fact Sheet on the Executive Order
- Holland & Knight, Fixed Price, First Choice: New EO Pushes Agencies Further Away from Non-Fixed-Price Contracts
- Crowell & Moring, New Executive Order Promoting Fixed Price Contracting: What It Means for Federal Contractors
- Covington & Burling, The New Executive Order on “Promoting Efficiency, Accountability, and Performance in Federal Contracting”: What Federal Contractors Need to Know
Need help assessing where your current systems stand against the new operating environment? Take our DCAA Compliance Assessment to identify your gaps in under 10 minutes.