The order requires a review of acquisitions for non-commercial products and services.
On April 16, 2025, the White House issued an executive order titled “Ensuring Commercial, Cost-Effective Solutions in Federal Contracts” (the Order) that directs government agencies to procure commercially available products and services to the “maximum extent practicable, including pursuant to the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355, as amended) (FASA).” Among other things, FASA established a preference for the acquisition of commercial products and services to meet the government’s procurement needs, where reasonable to do so. The Order outlines the administration’s intent to “enforce existing laws directing the Federal Government to utilize, to the maximum extent practicable, the competitive marketplace and the innovations of private enterprise to provide better, more cost-effective services to taxpayers.”
To facilitate the use of commercial products and services in contracting, the Order directs each agency’s approval authority and their respective contracting officers to conduct a review within 60 days of solicitations, pre-solicitation notices, solicitation notices, award notices, and sole source notices to identify any non-commercial products or services where the agency has not identified a satisfactory commercial option. Following the review, contracting officers are directed to consolidate each solicitation or notice for non-commercial products or services into a proposed application requesting approval of the purchase of the products or services, which must be submitted to each agency’s approval authority. The proposed applications must include market research, price analysis (as required by 41 U.S.C. § 3307(d) and 10 U.S.C. § 3453(c) and § 3453(d)), and the rationale for pursuing a non-commercial product or service.
Upon receipt of these applications for approval, each agency’s approval authority will have 30 days to assess each proposed application’s compliance with FASA and make appropriate recommendations to advance the solicitation of commercial products or services if sufficient to serve the applicable procurement needs. Within 120 days, each agency’s approval authority must also provide a report to the Director of the Office of Management and Budget (OMB) detailing the agency’s compliance with FASA and its progress toward implementing the Order. Reports will be required annually thereafter.
In addition, the Order provides that for any new solicitations of non-commercial products or services, the contracting officer must provide the agency’s approval authority with specific reasons a non‑commercial product or service is required, including all market research and price analysis in support of the proposed solicitation. The approval authority is to review and approve or deny the proposal in writing. During the course of review, the approval authority may seek input from the Director of the OMB, who shall assess the proposal and provide their recommendation in writing.
Contractors that provide non-commercial products and services to the government should be prepared to explain the value their products provide over commercially available products or services and be mindful of the government’s shift to a more commercialized procurement approach. In addition, contractors should monitor for new opportunities to provide commercial products and services.
Latham lawyers will continue monitoring and providing updates on further developments in the government’s approach to acquisitions.
