TIP LINE – EDITION 23 – Executive Order Promoting Efficiency, Accountability, and performance
In this week’s Capital Edge Tip Line, CEO Chad Braley shares an update on the latest Executive Order reshaping contract type preferences.
Key updates from this week’s Tip Line
What’s happening? At a high level, the direction is clear — there is increased emphasis on fixed price contracting, often paired with performance based incentives, and added scrutiny around the use of cost type vehicles.
- Additional approvals for cost-type contracts
- Contracting Officers are now required to obtain written approval from agency leadership for contracts above certain thresholds to award cost reimbursement, time and materials, or labor hour contracts.
- Justification thresholds vary by agency
- Agency head approval and written justification are required at defined agency thresholds:
- DOW: Above $100M
- NASA: Above $35M
- DHS: Above $25M
- All other agencies: Above $10M
- Agency head approval and written justification are required at defined agency thresholds:
- DOW focus on high-value contract renegotiations
- Within the DOW, evaluations of renegotiations for the top 10 highest value contracts are expected to begin within the next 90 days.
How contractors can stay ahead: Contractors should remain attentive to statement of work assumptions, definitions, and change order processes. While cost type contracts are not being eliminated, there are certainly additional hurdles in place.
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