On February 26, 2025, President Trump issued an executive order implementing the Department of Government Efficiency (DOGE) Cost Efficiency Initiative (Order). The Order seeks to transform federal spending on contracts, grants, and loans to ensure transparency and accountability. This includes requiring federal agencies to implement new mechanisms to record, justify, and approve agency payments; perform comprehensive reviews of contracts, grants, contracting policies, procedures, and personnel; and issue new guidance on signing or modifying new and existing contracts. The Order also freezes non-essential travel and non-critical credit card spending and imposes requirements on agencies for the disposition of government-owned and leased property. This client alert identifies key takeaways from the Order and provides important considerations for government contractors to best protect their interests.
Covered Contracts and Grants
The Order applies to discretionary spending through federal contracts, grants, loans, and related instruments, but excludes direct assistance to individuals; expenditures related to immigration enforcement, law enforcement, the military, public safety, and the intelligence community; and other critical, acute, or emergency spending.
Payment Review and Approval System
The Order directs agencies to work alongside DOGE to build a centralized technology system to record every agency payment made under covered contracts and grants. Agency employees who approve payments are required to submit a “brief, written justification for each payment,” which will be posted publicly. This system will also allow the pause and rapid review of any payment that did not include a brief, written justification.
Review of Covered Contracts and Grants
Within 30 days of the Order, federal agency heads are directed to review all existing covered contracts and grants to determine whether they should be terminated, modified, or negotiated to reduce overall federal spending or reallocate spending to promote efficiency and advance the President’s policies. Agencies are directed to prioritize the review of covered contracts and grants that have disbursed funds to educational institutions and foreign entities for waste, fraud, and abuse.
Contract and Grant Process Review
Agencies must also complete a comprehensive review of their contracting policies, procedures, and personnel within 30 days of the Order. During the review process, agencies may not issue or approve new contracting officer warrants, unless the agency head deems it necessary. This could have a significant impact on the procurement process, at least in the short term.
Guidance on Signing or Modifying Contracts
After agencies complete the reviews outlined above, and before entering into new contracts, agency heads are directed to issue guidance on signing and modifying contracts to “promote Government efficiency and the policies of [the] Administration.” Agency heads can approve new contracts on a case-by-case basis before the guidance is issued. Agencies must also provide monthly reports on contracting activities, including all payment justifications, to DOGE for review. It’s unclear what “guidance” DOGE is looking for, but this is also something that could significantly impact the procurement process.
Agency Travel, Credit Cards, and Real Property
The Order also freezes non-essential travel and credit cards, with few exceptions. Agency heads are directed to build technological systems to centrally approve records for federally funded travel for non-essential purposes, such as conferences. Once the approval system is established, agencies are directed to prohibit their employees from non-essential travel unless approved with a brief, written justification. Agencies are required to provide monthly reports to DOGE on non-essential travel justifications, which will be posted publicly.
All credit cards held by agency employees are “frozen” for 30 days following the Order, with an exception for cards being used for critical services (including, but not limited to, a disaster or natural relief) and the agency head and DOGE approve the use.
As for real property, the Order states that agencies shall:
- confirm within 7 days of the Order to the General Services Administrator that the agency head submitted updates to the Federal Real Property Profile Management System to ensure a more accurate inventory of real property;
- identify within 30 days of the Order all termination rights the agency head may have under the agency’s existing leases of real property, and determine whether to exercise such terminations; and
- submit within 60 days of the Order to the General Services Administrator a plan for disposing federally owned real property deemed no longer necessary.
This Order, like many issued in the past few weeks, is broad and leaves many questions unanswered. In light of this Order, there could be a slowdown in government contracts being awarded, payments under existing contracts could be delayed, and more government contracts could be targeted for termination or suspension. Understanding your rights and obligations under prime contracts and subcontracts is important as this process is implemented.
If you have questions about this Order or President Trump’s other executive actions, please contact Sam Finnerty, Lauren Brier, Kelly Kirchgasser, or another member of PilieroMazza’s REAs, Claims, and Appeals or Government Contracts practice groups. Also visit our Government Contract Executive Orders resource center for additional coverage.
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