New EO Mandates Cost Reduction at Federal Agencies

A new Executive Order directed "Agency Heads," in coordination with the Department of Government Efficiency, to terminate or modify federal grants and contracts, and to reduce travel spending and federal property costs.

The EO requires the establishment of a centralized system within the agency to "record every payment issued by the agency" under covered contracts and grants. Each payment must include a "brief, written justification" submitted by the approving employee.

Agencies must also conduct a "comprehensive review" of contracting policies and personnel, with a temporary halt on issuing new contracting officer warrants unless deemed "necessary" by the agency head. After "review[ing] all existing covered contracts and grants" Agency Heads may "terminate or modify" agreements to "reduce overall Federal spending or reallocate spending to promote efficiency."

Further, the EO mandates a freeze on federal employee credit cards for 30 days, except in cases involving "disaster relief or natural disaster response benefits or operations or other critical services."

Under the EO, the General Services Administration is required to assess federally owned real estate, with agencies identifying "all termination rights" under existing leases. Within 60 days, the GSA must submit a plan for the disposition of "Government-owned real property" deemed unnecessary.

The EO exempts law enforcement, military, intelligence and emergency spending from its provisions. Each agency's "DOGE Team Lead" must provide monthly reports on contracting activities. Payment justifications must be made public "to the maximum extent permitted by law."