Last week, the President signed a new Executive Order called “Promoting Efficiency, Accountability, and Performance in Federal Contracting” that has important implications for engineering firms that work as federal contractors.
Summary
The new Executive Order mandates the use of fixed price contracts as much as possible and requires justification by federal agencies when they do not use this contract type. The stated goals to “advance cost predictability and budget discipline, appropriate contractor incentives and accountability, and streamlined procurement and contract administration” seem to align well with ACEC views on the use lump sum contracting. Federal agencies have been using this type of contract for engineering services for many years. Thus, it does not appear that the order will change our industry, other than to reinforce the continued use of lump sum contracts.
Exceptions include support response to an emergency, major disaster, or contingency operation as defined in FAR Part 2, and research and development or pre‑production development for major systems acquisition.
- Next Steps
The Office of Management and Budget (OMB) has 45 days to issue guidance and the FAR Council has 120 days to propose a new rule FAR rule to implement the order. Agency heads are directed to renegotiate their top 10 existing non-fixed-price contracts.
- Implications for State DOTs
The E.O. does not apply to the federal-aid highway program and does not directly impact State DOTs managing federal funds. It does not reference or modify any of the FAR provisions or regulations applicable to federal transportation funding. However, this order should help our conversations with U.S. DOT and may aid our efforts to add provisions related to lump sum contracting to the surface transportation reauthorization this year.