OMB Seeks Details From Agencies on Their Commercial Buying, or Lack Thereof

Why It Matters

The directive intensifies federal pressure to shift billions in spending toward commercial solutions, promising cost savings and broader market competition while imposing tighter oversight on agencies.

Key Takeaways

• Agencies must report every non‑commercial award Apr‑Sep 2025
• Contracts > $10 million need justification for non‑commercial choice
• FY2024 non‑commercial spend topped $130 billion, two‑thirds total
• New process requires chief acquisition officer and political appointee approval
• Competition advocates must confirm lower‑level status and promote commercial buying

Pulse Analysis

The federal government has been nudging agencies toward commercial procurement for nearly three decades, beginning with the Federal Acquisition Streamlining Act of 1994. President Trump’s 2025 executive order reinforced that mandate, urging agencies to prioritize off‑the‑shelf products and services. OMB’s recent memo operationalizes the policy by setting a May 4 deadline for agencies to disclose every non‑commercial award from April to September 2025, and to explain any high‑value contracts that deviate from the commercial preference. This move signals a decisive shift from legacy procurement practices toward market‑driven solutions.

Data from the now‑retired Federal Procurement Data System reveals that in FY 2024, over two‑thirds of total contract spending—approximately $130 billion—was allocated to non‑commercial items, largely through cost‑reimbursement contracts for professional services, IT, telecom, and facility operations. Such a concentration underscores the scale of potential savings if agencies can substitute commercial alternatives. However, the transition is complex; many mission‑critical services lack ready‑made commercial equivalents, and agencies must balance risk, performance, and regulatory compliance. The OMB’s reporting requirement forces greater transparency, exposing where commercial options are viable and where policy adjustments may be needed.

To enforce the commercial‑first approach, OMB introduced a new consultation workflow. Any non‑commercial purchase now requires approval from the agency’s chief acquisition officer and a political appointee overseeing acquisition, with detailed justification covering contract size, market research, competition, and cost analysis. Competition advocates—officials tasked with championing commercial buys—must also confirm their hierarchical status and collaborate with small‑business directors to lower entry barriers. This layered oversight is designed to embed commercial thinking throughout the acquisition lifecycle, creating a more competitive marketplace for private vendors and potentially reshaping the federal procurement landscape for years to come.