Trump's Procurement Overhaul Targets $1 Trillion in Federal Spending

President Donald Trump has set his sights on transforming how the U.S. government buys goods and services, issuing an executive order titled 'Restoring Common Sense to Federal Procurement.' The directive, signed in early 2025, calls for the most significant overhaul of federal procurement rules in over four decades. With nearly $1 trillion spent annually on contracts, the stakes are high for businesses, taxpayers, and government agencies alike.

The order directs officials to streamline the Federal Acquisition Regulation (FAR), a sprawling 2,000-page document that governs federal purchasing. Within 180 days, agencies must strip away rules not mandated by law or deemed essential for efficient, secure, and cost-effective procurement. The goal is to reduce bureaucratic hurdles, encourage competition, and make it easier for new players, particularly small businesses, to secure government contracts.

This move builds on Trump’s broader deregulatory agenda, which includes a January 2025 executive order aimed at slashing regulations across federal agencies. By targeting procurement, the administration seeks to deliver tangible savings and efficiencies. Yet, the ambitious reform raises questions about how to balance cost-cutting with other priorities, such as environmental sustainability and fair labor practices, which have gained traction in modern procurement strategies.

The FAR, established in 1984, was designed to standardize procurement across federal agencies, replacing a patchwork of inconsistent rules. Over time, it ballooned into a complex web of requirements, often criticized for burdening contractors and agencies with excessive paperwork and compliance costs. The Trump administration argues that this complexity favors entrenched vendors, stifling innovation and competition.

Under the new plan, the Office of Federal Procurement Policy and the FAR Council are tasked with revising the regulation in two phases: first, issuing interim guidance for agencies to adopt simplified rules, and second, formalizing changes through rulemaking. A key feature is a sunset clause, where non-statutory rules expire after four years unless actively renewed. The administration also emphasizes buying commercial products over custom solutions, aiming to align federal practices with private-sector efficiency.

Historical efforts to reform the FAR, such as the Section 809 Panel’s recommendations for defense acquisition, have long called for agility and reduced red tape. The current overhaul draws on these ideas, but its aggressive timeline and scope set it apart, prompting both optimism and caution among stakeholders.

A central promise of the reform is to make federal contracting more accessible, particularly for small businesses. The Small Business Administration reports that small firms must receive at least 23% of federal contract dollars annually, yet many struggle with the FAR’s complexity. Compliance costs, estimated at 3-5% of revenue, hit smaller firms hardest, and new entrants dropped by 79% from 2005 to 2019.

Recent changes, like expanding the 'Rule of Two' to reserve more contracts for small businesses when at least two qualified firms compete, aim to boost participation. The Trump order’s focus on reducing paperwork and requirements could further lower barriers, potentially increasing the $6 billion in annual small business contract spending. Still, some worry that rapid deregulation might create uncertainty, complicating compliance for firms navigating interim rules.

While efficiency is a clear priority, modern procurement often balances cost with social and environmental objectives. Since the 1970s, policies have evolved to promote sustainability, fair labor, and community benefits alongside economic value. Green procurement, for instance, considers lifecycle costs and supplier practices, with some organizations reporting up to 9% cost savings and significant emissions cuts from sustainable practices.

The Trump administration’s reforms, which include removing climate-related and diversity requirements, prioritize cost and speed. Supporters argue this will unlock innovation and reduce taxpayer costs. Others, including advocates for sustainable procurement, express concern that sidelining environmental and social criteria could undermine long-term benefits, such as reduced carbon footprints or support for disadvantaged communities. The debate hinges on whether efficiency can coexist with these broader goals.

The procurement overhaul reflects Trump’s reliance on executive power to drive rapid policy shifts, a tactic seen in his '10-for-1' rule requiring agencies to repeal ten regulations for every new one. By bypassing traditional rulemaking processes, the administration aims to act swiftly, but this approach risks legal challenges and regulatory uncertainty. Contractors and agencies face a steep learning curve as they adapt to evolving guidelines.

Looking ahead, the reforms could reshape the federal marketplace, making it more dynamic and accessible. Yet, success depends on careful implementation to avoid unintended consequences, such as weakened accountability or overlooked social priorities. The 180-day timeline will test the administration’s ability to deliver a leaner, more effective system without sacrificing fairness or stability.

Trump’s procurement reform marks a bold attempt to cut through decades of bureaucratic buildup, promising a simpler, more competitive federal contracting process. By targeting the FAR’s complexity, the administration aims to save costs, boost small business participation, and align government purchasing with commercial practices. Early reactions suggest cautious optimism from businesses eager for fewer hurdles.

Still, the reforms prompt reflection on what efficiency means in a system that increasingly values sustainability and equity. As agencies race to meet the 180-day deadline, the challenge will be to streamline without losing sight of procurement’s role in serving broader public interests. For now, the nation watches as this ambitious overhaul unfolds, its full impact yet to be seen.