A US Executive Order Demands ROI but Assigns No One to Prove It

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On 30 April 2026 the White House issued Executive Order 14402, and its opening section says plainly what it is for. The United States Government, it says, must adopt the best business practices to protect taxpayer dollars, “hold contractors accountable, and achieve demonstrable returns on investment.” Fixed-price contracts with performance-based considerations become the default and preferred method of procurement. The order runs three pages. I read all of it looking for the part that says who establishes the return, and it is not there.

This is a serious piece of policy and it changes real behavior, so let me keep the point narrow. The order relocates accountability to the choice of contract type, and that choice is made before anybody has bought anything.

Every Duty Lands Before The Solicitation

Section 2 is the operative section. A contracting officer who wants anything other than fixed price has to justify it in writing to the agency head. Above a dollar figure the order sets itself, ten million for most agencies and higher for the Department of War, NASA and Homeland Security, the agency head has to approve the contract in writing. The order also lets agency heads delegate that approval to appropriate non-career employees. Agencies had ninety days to review their ten largest non-fixed-price contracts and try to restructure them.

The Federal Acquisition Regulatory Council issued model class-deviation text on 25 June and agencies updated their deviations by 15 July. The new Federal Acquisition Regulation section 16.104 keeps the same shape. It says the approval comes before the contract or order is used, and that an approved justification is valid for the duration of the contract or order. The Council’s own memorandum puts the gate earlier still, before the solicitation is released. Nothing reopens it. A judgment made before a single bid arrives governs the whole life of the purchase.

The judgment has a codified definition and it is the government’s own. Federal Acquisition Regulation 2.101 reads: “Best value means the expected outcome of an acquisition that, in the Government’s estimation, provides the greatest overall benefit in response to the requirement.” The operative words are expected and in the Government’s estimation, and both describe a forecast made before the work starts. The two parts that govern a contract after award never come back to that forecast. Best value appears zero times in Part 42, Contract Administration and Audit Services, and zero times in Part 46, Quality Assurance, and so do outcome and estimation.

Since then the rule has moved toward permanence. On 18 September the Council proposed to write section 16.104 into the regulation itself, and comments stay open until 19 October. I read the proposed text for the one thing that would change the argument here, which is whether the justification has to say anything about the result. It does not. What it has to carry is the information in section 16.103, the section on documenting contract type, together with whatever determinations and findings the contract type already requires. There is no outcome in it, no verification, and no measurement. The approval is being made permanent with the half that matters still missing.

The Only Number It Asks For

The order creates one reporting duty. Section 2(d) requires each agency head to report semi-annually to the Director of the Office of Management and Budget “the number of, value of, and written justifications for, any non-fixed-price contracts approved.”

Set that next to the opening section. The order exists to achieve demonstrable returns, and the number it asks agencies to send in twice a year is how often they chose the other contract type. That is a count of exceptions to a drafting preference. It carries nothing about whether the fixed-price contracts bought what they were priced against.

The vocabulary that would carry the other duty is simply absent. Verify, verification, assess, assessment, evaluate, evaluation, audit and measure appear nowhere in the order. Outcome appears twice, both in the opening section, both describing what a fixed-price contract defines at the moment it is written. The document is three pages and anyone can check it.

The Clause It Did Not Reach For

The remedy already exists, and that is the part I find hardest to explain away.

Federal Acquisition Regulation clause 52.246-4, Inspection of Services, Fixed-Price, has carried its current text since August 1996. If services do not conform with contract requirements the government may require reperformance at no increase in price, and where the defect cannot be corrected that way, the government may “reduce the contract price to reflect the reduced value of the services performed.”

A price reduction measured against reduced value is close to the instrument the order’s own purpose calls for, and it sits in Part 46, Quality Assurance. The order and the regulation written under it changed Part 16, which is about how a contract is priced. Neither mentions Part 46 and neither extends the inspection clause anywhere it is not already required.

The clause carries a limit worth naming, because that limit belongs to the buyer rather than to the regulation. A price can only be reduced against requirements somebody wrote down. If the well-defined outcome the order keeps invoking never becomes a contract requirement, the reduced-value remedy has nothing to measure against and the clause does no work.

What The Argument Was Actually About

I read a fair amount of the commentary. Law firms told contractors to reassess pricing assumptions and watch for protest grounds. Former agency acquisition executives argued about whether a second approval layer adds weeks to a procurement. One noted that justifications for other-than-fixed-price contracts have existed for twenty-five years and that what changed is how far up the building they travel. Another said agencies have to understand the performance outcomes and define what success is, and that in her experience this is rarely as black and white as anyone would like.

All of that concerns the front end. I did not find anyone asking what an agency has to do after delivery to establish that the defined outcome arrived, and that is the question the opening section puts on the table.

What A Buyer Takes From It

Federal buyers work with what the order gives them. Everyone else can read it as a worked example, because the pattern is ordinary in commercial buying and the order states it unusually clearly.

Governing the price is not the same as governing the value. A buyer who fixes the price and leaves the proof unassigned has settled the payment and nothing else. Closing that takes three things and none of them is exotic. Write the outcome into the contract as a requirement, in terms an outsider can observe, so an inspection clause has a standard to bite on. Someone has to own the assessment, on a stated cadence, from a named system of record. And a consequence has to attach to the finding, because an assessment with nothing attached to it is a report.

I have written before that an audit right reaches the seller’s costs and not the buyer’s outcome, and that value governance arriving after the money has moved is a postmortem with a budget line. This is the same gap, at the top of the federal government, inside an order whose stated purpose is to close it.

The order settles what the government will pay. It leaves what the government got to whoever decides to ask.

References: Executive Order 14402, “Promoting Efficiency, Accountability, and Performance in Federal Contracting”, 30 April 2026, 91 FR 24325, published 5 May 2026. Federal Acquisition Regulatory Council and Office of Management and Budget, “Agency Implementation of Executive Order 14402”, 25 June 2026, with model class-deviation text for Federal Acquisition Regulation parts 16 and 52. Federal Acquisition Regulation 52.246-4, Inspection of Services-Fixed-Price (Aug 1996), FAC 2026-01 effective 13 March 2026. Federal News Network, “The preference for fixed-price contracts receives accountability boost”, 1 May 2026, for the practitioner commentary quoted in summary. Federal Acquisition Regulation Case 2026-006, proposed rule, “Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 16, 17, and 35”, 91 FR 59476, published 18 September 2026, proposed section 16.104 text at 91 FR 59489, comments close 19 October 2026. Federal Acquisition Regulation 2.101, definition of best value. Federal Acquisition Regulation part 42, Contract Administration and Audit Services, and part 46, Quality Assurance.

Keep reading: ACT II · Chapter 8: The Buyer Lifecycle Is Progressive Governance