Executive Order in Procurement

An Executive Order (EO) in procurement is a directive issued by the President that instructs federal agencies to change how they buy goods and services or what they require of their contractors. Unlike laws passed by Congress, Executive Orders are issued unilaterally by the executive branch. In the procurement context, they typically flow through by requiring new FAR or DFARS clauses that get inserted into contracts, making compliance mandatory for any company doing business with the federal government.

How Executive Orders Shape Federal Contracts

Executive Orders affect contractors indirectly. The President issues an order directing the Federal Acquisition Regulatory Council or the Department of Defense to amend the FAR or DFARS. Once the rule-making is complete, new contract clauses appear in solicitations, and companies must certify or comply as a condition of receiving award. This process can take months to years, but interim rules sometimes take effect much faster for urgent policy priorities.

Common areas where Executive Orders have imposed procurement requirements include minimum wage and pay transparency for contractor employees, restrictions on certain Chinese-manufactured technology, domestic content requirements under Buy America or the Build America, Buy America Act, cybersecurity standards for contractors handling federal information, and requirements to use certain categories of small businesses or set-aside eligible firms.

Notable Examples

Executive Order 14026 raised the minimum wage for federal contractors to $15 per hour, with annual inflation adjustments. This was implemented through a new FAR clause inserted into covered contracts. Executive Order 13920 restricted certain electric grid equipment from foreign adversaries, affecting energy sector contractors. Executive Order 14017, the Supply Chain Resilience order, drove significant changes to domestic content requirements in sectors from semiconductors to pharmaceuticals.

For defense contractors, EOs on cybersecurity have been particularly consequential. Executive Order 14028 accelerated the implementation of software security requirements including SBOM (Software Bill of Materials) mandates, which now influence how dfars cyber clauses are applied.

How Contractors Should Monitor Executive Orders

Tracking active Executive Orders is a recurring compliance task. Contractors should monitor the Federal Register for new EO-related interim rules and final rules that amend the far or agency supplements. Major trade associations in the defense, IT, and construction sectors publish EO compliance trackers. For solicitation analysis, examining whether an RFP includes new or unfamiliar clauses is often the first signal that an EO has driven a change in requirements.

Frequently Asked Questions

Are Executive Orders permanent?

No. A new administration can revoke or amend EOs from previous administrations. This creates compliance uncertainty for contractors on long-term contracts when a new EO contradicts a prior one. FAR rules based on revoked EOs generally survive until formally amended through rulemaking.

Does an EO apply immediately to existing contracts?

Usually not to existing contracts, but to new awards and contract renewals after the implementing FAR clause takes effect. Bilateral contract modifications can extend new requirements to existing contracts by agreement.