Hunton Retail Law Resource

The federal government has long maintained a preference for selecting commercial products and services in the federal procurement space.  This preference has been the case since at least the time President Clinton signed the Federal Acquisition Streamlining Act of 1994 (FASA) into law, and has been reiterated by Congress since then, including in the National Defense Authorization Act for Fiscal Years 2016 and 2017, for example, and the preference is enshrined in Federal Acquisition Regulation (FAR) Part 12.

On April 16, 2025, President Trump issued an Executive Order, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts, adding to government’s efforts to prioritize commercial products and services.  From now on, when agencies choose to utilize non-commercial products or services, they must document that choice and receive approval from an agency’s approval authority (which is defined as the senior procurement executive).

The Executive Order provides specific timelines and requirements for procurement officials:

• Within 60 days of the Executive Order, the senior procurement executive must direct their contracting officers to review all solicitations and other open procurement actions where the government was unable to identify a viable commercially available alternative, and all of these procurement actions should be consolidated into a consolidated application requesting approval to purchase noncommercial products or services.
• Within 30 days of receiving the application materials, the senior procurement executive shall review the market research supporting the application and make any recommendations to advance the use of a commercial solution.
• Within 120 days of the Executive Order (and annually thereafter), the senior procurement executive for each agency must provide a report to the Director of the Office of Management and Budget (OMB) detailing the agency’s compliance with its requirements to prioritize the use of commercial products and services and explaining how it is implementing the Executive Order.

Moving forward, non-commercial procurements will be subject to additional scrutiny:

• When a contracting officer proposes to utilize non-commercial products or services, the contracting officer must provide detail to the senior procurement executive of the market research conducted and the justification for choosing that path. The senior procurement executive may accept or deny the contracting officer’s request.
• The senior procurement executive may seek additional guidance from the Director of OMB who will notify the agency official in writing of its recommendation after conducting a review.

As a whole, this Executive Order pushes contracting agencies to conduct market research and justify the use of non-commercial products and services, consistent with FASA.  Contractors selling non-commercial products and services to the federal government should take notice, especially when there is an arguably commercial alternative, even if the commercial alternative is less advantageous in price or features.